Rethinking Africa’s transformational Growth Model: Moving away from the “rules of thumb” style to contextual approaches that unlock impact.
In the journey of life, one of the first places that bring to the fore the distinctions between us as individuals is the schooling environment. That is where for the first time, we appreciate with more certainty that we are all not gifted the same in every area. While some students are good at the arts, others find arts totally boring, but the sciences fascinating and vice versa. While some students top the class, others find themselves at the bottom of the class. A smart teacher who wants to get the highest class average would not approach all the students using the same strategy. They would instead tailor their teaching to suit each student individually. To some, they would recommend remedial classes in all the subjects. While others would be recommended remedial classes in some of the subjects, and some would not be recommended with any remedial classes. To some, they would ask to speak to their parents. This underscores the importance of context in devising effective, workable solutions.
In the same vein, Africa’s unique circumstances cannot be overstated. This is a region whose economies are up to 20times less productive than competitors in the global space but needs to create no less than 12–15million jobs every year. It is projected to face the most significant expansion of its working-age population of 450million more people or 70% in slightly over a decade from now. The region is also disproportionately vulnerable to the changing climate. The region is already heating up twice as fast as the rest of the globe, and some 20 countries cutting across all the regions of Africa, are already warming more quickly than the globe. On the economic front, while climate change is a global phenomenon, losses are not equally distributed. While climate change is projected to shrink incomes globally by an average of 23% every year, incomes in developing economies, the majority of which are in Africa and which are already disproportionately vulnerable, are projected to decline by a monstrous 75%. These contextual factors underscore the fact that approaches that have worked elsewhere and are loosely stamped as “rules of thumb” cannot be applied exactly the same way in Africa as they have been used elsewhere, hoping that they will generate positive results as may have happened in other jurisdictions. Far from it.
Contrasting “run-of-the-mill” approaches with contextual approaches to projects
Consider the approach to project development and deployment in Africa. It starts with needs assessments and feasibilities, then goes to stakeholder engagement, and then numerous workshops to discuss financing. All these processes cost astronomical sums of money — even before any actual work starts on the ground. For example, it is estimated that for the six largest infrastructure markets in Africa, the development costs of projects in just the feasibility study can be as high as $30 billion. It is, therefore, no wonder that up to 80% of such projects in Africa fail at the feasibility phase. The core reason being that after spending stupendous sums of money on project planning, there is not enough left to do actual implementation from where much-needed impact is derived.
Practical Needed Working Model for Africa
Africa needs a different model that will result in a drastic reduction in the cost and time spent in the planning phase and instead focuses most of the budgeted resources on doing actual ground implementation that unlocks impact.
First, the region needs to build on actions that are already working on the ground among the informal sector that already engages up to 80% of the continent’s productive population. Considering that the challenges of these actors are already known, the priority should be for surgical interventions that deliver solutions to bridge gaps towards enabling these informal sector actors to maximize their productivity. For example, over 60% of Africa’s productive population is engaged in agriculture, and many more sectors intervene within this sector through forward and backward supply chain linkages. However, the inefficiencies in this sector accumulate post-harvest losses (PHLS) that have topped up to $48billion in one year. While this is alarming, simple climate action solutions of solar dryers, made from locally available material, have been shown to increase the shelf-life of perishables among informal market traders to cut PHLs, leverage for better market prices, and as a result, increase earnings by up to 30times. Delivering such known solutions needs very little feasibility. It requires a direct connection of the solution to the informal sector. And to lower risks, building on informal sector financing structures such as communal cooperatives, coupled with insurance packages taken to cover against product marketing risks and public-private partnerships to only cover capital expenditures, can go a long way. This direct connection of solutions to maximize what is already working among the informal sector enterprises and cutting off intermediate processes that suck up significant resources is the delivery approach that suits Africa’s context and saves resources.
Second, while macro-economic measures like Gross Domestic Product (GDP), Per Capita Income etc., are the conventional measures used to monitor the health of an economy, we must appreciate that in Africa, where economic inclusivity is a significant issue, the micro-economic is what matters most. Trickle-down economics will hardly benefit Africa, with the GDP being generated through the participation of only a minority of the population. For example, we have resource-rich countries of Africa hailed very highly, and they were the basis of the “Africa rising” narratives that were headline news a few years back. But on average, only about 3% of the population participates in extractives. What should interest us is the economic performance of the “micro” sector, who form 97%, and who are primarily in the informal sector. And for this to work, we will need the “macro” level to reconcile with the “micro”. We will need the top-down to reconcile with the bottom. And the place where these two connect is in policy and legislation. The macro-level should invest in policy incentives directly targeted at stimulating enterprise opportunities in the informal sector.
On the other hand, the informal sector must generate empirical data that clearly shows what works successfully so it can be the target of policy incentives to maximize, grow, and expand coverage. For example, the agro-value addition is needed to reverse the continent’s $48 billion post-harvest losses yearly. Reversing these losses implies opportunities in farming and logistics, marketing, input manufacturing, clean energy, and financing. Providing incentives — be it to enhance financial access such as through risk-sharing facilities & insurance, or to enhance efficient connectivity, e.g., through targeted infrastructure development to close marketing gaps, or education and training to close skills gaps — across different sectors where the informal sector is engaged in enterprising actions that intervene to enhance agro-productivity, will be an optimal place to start to expand what is accessible and already working and thereby maximize beneficial impacts.
“The one with eyes is not told to see”. This self-explanatory African proverb reminds us that we can already see that the continent ails from a non-contextual approach to solutions. We can already see that “run off the mill”, traditional linear approaches that are hailed to work elsewhere and which are similarly prescribed for Africa, have failed to deliver optimally in the continent. What we must therefore embrace is that solutions must be contextually framed and, most importantly, buttress the enablers of sustainability. Where policy focuses on incentivizing what works at the informal sector enterprise level, and the informal sector generates empirical data of proven successes to inform continuous policy recalibration towards stimulating more of what is working for expansion. The bottom and the top must meet in the middle. This is the urgently needed model that will result in a drastic reduction in the cost and time spent in the planning alone to now focus on doing actual ground implementation that unlocks impact for the collective benefit of all.