K.Y. Amoako: Securing Growth with Depth

By K.Y. Amoako, Founder and President, Africa Center for Economic Transformation (ACET)

In the push for African states to collaborate with business for economic transformation, this report offers fresh, promising ideas for the “how.”

Economic transformation, as we champion it at the African Center for Economic Transformation (ACET), is growth with DEPTH. That is, growth with diversification, export competitiveness, productivity increases and technological upgrading, all leading to human well-being. Such transformation requires getting the balance right between the state and the private sector.

 

In Sub-Saharan Africa’s recent history, the interplay between the state and the private sector has too often, and tragically, been approached as a zero-sum game where one’s gain is the other’s loss. From the 1960s to the early 1980s, many Sub-Saharan African countries pursued overly state-led development, often regarding markets and private businesses with suspicion and at times even trying to suppress them. Then from the 1980s to the 2000s, the pendulum swung to the other extreme. Under reforms inspired and financed by the International Monetary Fund, World Bank, and some donors, the state was seen as the impediment to economic efficiency and growth.

 

For true transformation to happen, the two sides must find effective mechanisms to collaborate and support each other in the pursuit of economic and technological learning while paying sufficient attention to economic efficiency. The right balance will vary depending on each country’s history, political system, and institutions – and on the specific challenges and opportunities it faces.

 

As a new report by Business Action for Africa and its partners illustrates, the needs are many, but the private sector has many ideas and capabilities to contribute. Take economic diversification: Increasingly, businesses, especially those involved in resource extraction, recognise their self-interest in helping to diversify the economies of their host countries to extend the benefits of the mineral resources long after the resources are depleted. The Tofakala programme in Botswana, for instance, shows a commitment by the partners to look beyond diamonds.

 

In addition, all the cases shared in this report have technological upgrading as a vital component – from Microsoft’s 4Afrika programme to Standard Chartered Bank’s Goal programme.  And, of course, the ultimate goal of all the programmes is to improve human well-being.

 

Collaboration between business and government is a must if Africa is to transform. The ideas and cases in this report are but a few of the possibilities. I hope these ideas here trigger other ideas for other companies to take new initiatives, or build on what has been started, to make economic transformation of their host countries a key part of their business.

 

But government’s role remains the most critical piece, including providing leadership in setting a coherent national vision and strategy, providing public goods, and making the environment friendly for business. Those fundamentals would enable business to take risks, get rewards for those risks, and play its role in achieving the common goal of economic transformation.

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