The role of the state in the economy has been at the centre of Africa’s development debates from the early 1960s. In those post-independence years, state control of the “commanding heights” was more the rule than the exception. National development plans laid out detailed strategies for resource mobilization and identified sectors that required special attention to ensure rapid and equitable development.
The external shocks of the 1970s and 1980s and the political stresses that they unleashed forced governments to abandon their earlier and often collectivist positions. With assistance from the donor community, notably the multilateral development banks, most African countries embarked on “far-reaching structural reforms” which emphasized the important role that markets must play in the efficient allocation of scarce resources. Thus for at least the period up to the late 1990s, the development argument seems to have been settled–market fundamentalism ruled supreme in Africa.
It is thus somewhat surprising that the arguments from Africa’s founding fathers, including Kwame Nkrumah and Julius Nyerere, in support of state supremacy in economic development are returning to the policy table, if not full circle, in a manner not thought possible only a few years ago. So what has happened? Will it be different this time?
New Wine in Old Bottles?
It has been argued by the more skeptical observers of the African economy, that what we see today in Africa is simply new wine in old wine bottles. Supposedly the taste will remain the same as the continent’s performance reverts to type. However, this would be missing a very important point. For much of the post-independence years, Africa’s “rules of engagement,” were defined pretty much outside the continent. This was marked especially during the structural adjustment days and those of the highly-indebted poor country (HIPC) process. But since the early 2000s, with the steady improvement in Africa’s performance, better economic management, and diversification of trade partners (with China becoming a major partner), the discourse on Africa began to change. The continent could now be assessed “warts and all” on its own terms. Thus in spite of the penny-a-dozen superlatives being coined by global media on Africa’s recent progress, many leaders now understand that progress will have to be from within–from Africa’s dynamic challenges and responses of the political processes. This is clearly demonstrated by the conferences and symposia that governments all over Africa have organized, on own volition, to debate the way forward in recent years.
The high growth rates of the African economies in the last decade and a half have raised the confidence of Africa’s leaders. At the same time the relative decline of the market model in the global economy, and the undisguised intervention of Western governments in markets during the financial crisis, have indicated that there are many development alternatives in the market place. But, perhaps, the most endearing explanation for the changing policy approaches in Africa is the success of the developmental state model in Latin America and East Asia, and more recently China and India. In all these cases, governments played a critical role in investment decisions, promoting champions, and identifying new growth industries. They did not shy away from “picking winners.” Indeed, in retrospect many African countries would rather chose the “distorting” industrial policies pursued by Asian countries to promote their development in the past years than the “laissez faire” approach pursued in Africa, which has led to deindustrialization, and falling modern employment opportunities.
However, the “developmental state model” does not simply work by proclamation. It must be pursued with discipline and purpose. The Asian economies show, for example, that governments were very active in promoting both savings and investment. They focused very early on in the process in the development of energy and transport infrastructure, as well as technical skills to reduce the cost of doing business and to allow firms to graduate to more lucrative industrial niches. This required considerable planning and “clever” regulation. Governments in Asia also sought to put their best people in the financing ministries and the regulatory agencies. They encouraged domestic competition, even as they promoted national champions externally.
Are all these activities too tall an order for Africa? Not really. Countries from across the continent have shown themselves to be nimble in adopting new technologies and in setting up complex structures to reach the global market. However, this must be done on an even broader scale, in a world where competition is stiff and where other countries and regions are seeking to maximize their comparative advantage.
Tweaking the Asian Template
What Asian and Latin American countries did to progress is now relatively well known. They worked hard to establish efficient bureaucracies that ensured that policies continued even when their originators had departed. However, a concern for some Africans is whether the developmental state implies the acceptance of an autocratic regime, so long as it delivers development. Some African leaders, notably Meles Zenawi of Ethiopia, have argued that democracy and the developmental state are compatible, indeed he saw one as integral to the other. He liked to illustrate that without participatory democracy it would have been very difficult to convince Ethiopian farmers to embark on their agricultural revolution, which has banished famine in that country. Still, African leaders need to be careful as concentrated state power partly explains the failures of the post-independence years.
Conclusion: Back to Basics
What distinguishes Asian and Latin America development experience from that of Africa is that the role of the state was more pronounced in the former than the latter. In Africa, the bulk of the national plans and visions were left to gather dust as more crucial political demands descended. However, there are reasons to be optimistic. In the past decade and a half, African countries have shown a high degree of resilience, even under extreme external pressure, thanks mostly to better economic management and political maturity. Looking forward, the developmental state should not become an empty dictum but rather a framework for purposeful and dedicated development efforts to enhance the African population.
Steve Kayizzi-Mugerwa, Ph.D., Africa House Visiting Scholar
Steve Kayizzi-Mugerwa received his Ph.D. in Economics from Gothenburg University in Sweden in 1988 and became Associate Professor at the same university in 1994. He worked as a Senior Economist at the IMF in Washington, D.C., Project Director and Fellow at the World Institute for Development Economics Research (WIDER) of the United Nations University, Helsinki, and most recently as Director of Strategy, Director of Operations and Director of Research,respectively, at the African Development Bank (AfDB) in Tunis and Abidjan. His last post at the AfDB, which he left at the end of 2015, was Acting Chief Economist and Vice President. He has collaborated with many international and national institutions and has been an external examiner of doctoral students in Africa and in European countries.He has been a consultant for the Swedish International development agency, the World Bank, the OECD and the UNDP. He considers the policy dialogue which he undertook with government leaders from across Africa, during his years at the AfDB, as the height of his career, and is planning to write a book about these experiences.