Private Sector Led Growth

Last year, I finally came around to watching the mini-series “The Men Who Built America”—a documentary produced by the History channel chronicling some of the most formidable entrepreneurs of the Gilded Age: Vanderbilt, Rockefeller, Carnegie and JP Morgan. These men had betted their entire existence on solving some of the most challenging problems at the time—transportation, energy, steel— in exchange for some of the largest fortunes in modern history.

Indeed, watching this show reaffirmed what I had always known to be true: that one can only enrich oneself by enriching others. But, equally as important, I was also reminded that civilisations are not built by politicians nor governments, but by the individual who strikes out into the unknown and brings forth new contraptions that make society better off—the entrepreneur.

And while the system that enables entrepreneurship—capitalism—has had its fair share of unpopularity ever since Karl Marx put pen to paper, I think the events that are currently unfolding have impeccably demonstrated the central role businesses—and entrepreneurs—play in holding civilizations together. To solve the challenges brought about by COVID-19, we are looking to businesses to come up with the vaccine, to deliver groceries as we self-isolate, and to provide us with basic amenities such as internet connectivity and Netflix.

Indeed, hadn’t Vanderbilt taken on a mountain of debt to construct the railways that traverse the Eastern seaboard to this day; hadn’t Rockerfeller competitively slashed prices thus bringing Kerosene to every household; hadn’t Carnegie offered cheap steel in abundance to fuel the construction boom of 19th Century— the US would not be the economic marvel it is today.

Realising this power of enterprise, China and its South-East Asian counterparts streamlined their market economies and worked in concert with entrepreneurs to morph into the large manufacturing powerhouses they are today. This was, of course, with a bit of help from an ever-prospering consumer base in the western world. It is through this delicate interplay that China, South Korea and others have pulled hundreds of millions out of poverty.

Its then, with immense perplexion, that I wonder why we haven’t applied the same entrepreneurial approach to the problem of poverty and underdevelopment in sub-Saharan Africa.

Am I saying that the Africans have not tried their hand at business? No, not at all.

But what I’ve noticed in my country, Uganda, and several other African countries that I’ve chanced to travel to, is a shortage of ambition. Most people getting into business do so as a last resort, not as a primary objective. Starting off with such an inauspicious attitude, the business owner is therefore never able to scale the business or even guarantee its continuity beyond the next generation. We, as African entrepreneurs, need to adopt that Gilded age ambition, so to speak.

Another challenge, of course, is globalisation. It is nearly impossible for local manufacturers to compete with global powerhouses that have perfected their supply chain and thrive on the efficiencies of scale, not to mention their billion-dollar R&D coffers. To get into competition with such behemoths is to set yourself up for failure in the first place.

What then?

One lesson we can pick from China, Korea and Singapore is two things: the role of education and the role of multinationals. By educating their nation’s brightest from leading western institutions(and mandating them to return either by brute force or promises of competitive jobs), these countries have been able to build their expertise in several fields, eventually enabling them to compete with age-old global powerhouses. And through multinationals, they have formulated a symbiotic relationship where they provide multinationals with labour as the multinationals in-turn provide much-needed jobs to millions of citizens.

It is this latter route that I would like to explore.

The statistics are very much in our favour: by the year 2050, 1 in every four people will be African. This has strong implications for our consumer base and human capital. We stand to reap tremendously if we approach this demographic opportunity with great strategy and deliberation.

Breaking down the composition of this demographic even further, it can be predicted that the majority of these Africans will be semi-skilled(or even unskilled) youth. Ensuring that these individuals have jobs will not only promote peace by keeping them out of rebel groups but will also have trickle-down effects within the economy as they consume goods and take care of their extended families.

Am I saying that “Big Business” is the all-encompassing solution to sub-Saharan Africa’s problems?

No. I’m well aware that things are much more complicated than that. But I also know that this is an element that’s been present in almost every prosperous nations success story that we as Africa seem to be missing.

I’m willing to bet my pair of oxford shoes that, if word got out in Somalia that there was a factory off the coast in desperate need of youthful and energetic workers willing to pay just $3 an hour, we would see the violence disappear in a matter of weeks as these rebels(who are mostly youth) flock to these jobs where they can be guaranteed of a wage without sacrificing their life and dignity.

It is the same logic that applies to a village-full of people living on less than $2 a day and thus not participating in the global economy. It’s not that these people have nothing to offer—in fact, many of them are able-bodied and eager to exert themselves. They just need a deep-pocketed bourgeoise capitalist to come in and provide them with the opportunity to do so.

Rwanda has taken great steps in implementing this model, as seen by its new Volkswagen assembly plant. However, it has received due criticism that, firstly, no significant portion of their demographic--and that of neighbouring countries--can afford brand new cars. Secondly, that the plant utilises skilled labour that is not readily available within local communities and thus does not fully benefit the country.

These are valid criticism and we should pick a lesson from them. We shouldn’t look too far into technical fields. There are shoe manufacturers that could use our cheap labour, textile manufacturers, and many other low-skilled, labour-intensive industries that could benefit from moving from Shenzhen where the labour prices are ever-soaring to Africa where a two dollar hourly wage would make a difference between life or death.

I suggest we pursue this strategy with the full-on tenacity that our leaders use to cling to power.