The solution to the “African problem” does not lie with Government

First of all, let’s start by defining the symptoms of the “problem”:

• Lack of affordable, quality education
• Poor basic services delivery: Electricity, Water, Sanitation
• Lack of employment and Poverty

If those are the symptoms what is the root cause? Well, there is not just one, otherwise we would have solved it by now, but in this article I deal with one of the root causes and attempt to suggest a solution.

Governmental over-participation

For far too long we have waited for the government to “fix this” and the government to “fix that”. In some countries on the continent a such failure by government often leads to public unrest and the destruction of public property. This is counter-intuitive and disingenuous. In fact, the only role that governments ought to be playing in the alleviation of poverty on the African continent is “getting out of the way”. In other words, set the legal framework so everyone has the ability to know EXACTLY what will happen if… Then ensure a stable political environment and then leave us be. Instead many governments across Africa are running companies (parastatals), employing incompetent staff and mismanaging tax-payer’s money and not providing the environment required for the economies to grow.

If things were up to me, the state would stick to those things it knows how to do: govern, i.e. spend money and leave the MAKING MONEY to the private sector. But I digress… Here’s my argument in a snapshot (after this you can go back to sleep ):

1. Government creates stable framework for business
2. African entrepreneurs and business people grow SUSTAINABLE companies:
3. Sustainable companies:
   1. Pay their staff well
   2. Develop their staff (skills transfer)
   3. Encourage their staff to perform risk assessments (Both business and health and safety)
   4. Encourage their staff to respect diversity
   5. Ensure that their staff are insured and assured (medical aid, etc)
   6. Provide for their staff’s retirement
   7. Have flourishing CSI programs in the communities in which they do business (mainly because it grows strong brand loyalty).
4. Fulfilled and happy staff then transfer similar knowledge to their family members
5. Communities (Families make up communities) become more affluent and knowledgeable and, more importantly, give rise to more African entrepreneurs and the cycle continues.

The Private Sector is more capable

There’s not a single country that actually approaches economics in a pure, free market, capitalist way. I like the free market – but it very much exists only in textbooks. If I had a choice, and we could live in a very pure world, I would be a supporter of the free markets.

Dambisa Moyo

In my view, sustainably run entities are perfectly capable of profitably running water and electricity supply companies, airlines, etc. and make decisions based on sound business principles. Win-win.

The problem in my view lies in steps one and two above. Firstly, governments are “over-reaching” and getting involved in running what essentially are businesses badly and into the ground. One hint as to why… *coughs profiteering*. As a result, step 2 becomes difficult and all the dominoes fall.

The second problem and this is actually the MORE difficult one to fix, is the “we want everything NOW” attitude that sadly affects a lot of us on the continent. Sustainable companies take years – no decades – to grow. Consequently, many African businesses are not run SUSTAINABLY as many owners seek to “get rich” as soon as possible (and often take shortcuts) rather than slowly build conglomerates – it just takes too long. These businesses often confuse “making money” with “building a business” [that makes money]. The former adds very little to anyone except the shareholders and is not geared for the long term, whereas the latter accepts that in order to be around for 50-100 years, certain austerity and frugality principles need to be in place. And cutting corners is out of the question.

In conclusion, first, we need to change our attitude – accept that the continent is behind and accept that it will take decades to catch up. Then, once we have rid ourselves of the “pressure” we need to starting building BIG, sustainable African companies (from scratch). Producers from, based in and contributing to the African economy (as opposed to non-African companies that often repatriate to other continents) – these will in turn elevate the people of the continent as a matter of course.

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