When that Coronavirus pandemic ends, we don’t know when, the world would have recorded many deaths of human beings and companies. Many companies would have simply closed, some would emerge bruised while others permanently changed. This is true of governments too. The Coronavirus has put countries and governments on a war footing. The measures to put in place cannot be like an exchange of niceties. They will be tough and may hurt too. Many countries have already announced shutdown and stimulus packages. Part of the packages are to ensure that life goes on during the pandemic while others would be to actually stimulate and revive the economy. Where will Africa be in all this. What change will the virus bring to Africa?
Major crises change the world order. Today the world order is changing as a result of the coronavirus and other factors. That change tends to favor Asia with 1.4 billion people in China, 1.3 billion in India and almost another 1 billion in other Asian countries. They have the population advantage and all they need is the technology to keep them in the leading position worldwide.
Every crisis brings change, at times crises destroy individuals and institutions and indeed nations. This crisis will hurt countries. How will Africa be affected? Argentine was ranked as one of the richest countries before World War II. It was richer than France and Germany. Today nobody talks about it anymore other than remembering the so-called dictators in that country. The United Kingdom ruled the world for several hundred years and there was the feeling that The Sun would never set on the British Empire. The UK was responsible for the first industrial revolution, they gave us the steam engine, electricity and this changed the world. The UK was the world’s industrial leader for years. Wealth or prosperity was associated with the UK. The UK then ruled over most of Africa. Today that is history.
The United States took over from United Kingdom around 1890 and gave us the second and third industrial revolutions. The US has been invincible. Whenever it sneezed the world will catch the cold, until now. It is the world largest economy. Its world leadership has been powered by technology. Industrial production though moved to Asia in the last 30 years. It left the US with high tech industries and services. The next world lead country must be the one that is capable of controlling 5G, hence the current dispute between the US and China. Control of 5G will lead to control of the dawning of the 4th industrial revolution.
Today, China is an economic power house, it literally manufactures everything, the US has had a competitive advantage in technology, if it loses the 5G war then it will say bye bye to global influence. But at the moment the US influence on Africa and its domination of the world continues to be unprecedented directly or indirectly through United Nations and the World Bank institutions.
The Coronavirus is a game changer. No event has ever affected the entire world like the virus has done. It is phenomenal. Every adult in the world today is aware of it. It is scaring and is causing panic because it leads to death and has no vaccine. After the virus has gone, we hope it goes soon, the issue will be how to develop and control technology and empower business. This is a crucial time.
For the US it will be to empower American businesses to dominate the world. For China the key sectors of the economy are owned by the government and the key issue will be to dominate the world through government owned business. The rest of the developed countries in the west are likely to gang up with the US against China. India will sit on the fence while Russia gangs up with China. The Coronavirus has given the world World War III, fought without guns but a genetic war. We are yet to agree whether it is a war in that proportion. World War IV is likely to be a tech war combined with bio technology. A war driven by 5G, Robots and bio genetics. I shudder to think of the consequences. We ain’t seen anything yet! But where will Africa be in all this?
In recent years there has been a lot of hullabaloo about Africa being the next big economic thing. Will the next economic miracle emerge from Africa? For me the simple answer is no. Africa is economically fragile and too divided to take the benefits of technology and acting together. There is the Arab North, the Francophone countries, Anglophone countries, the rich South Africa. All these regions and groupings have selfish interests. They are externally influenced by leading world powers which shape their policies. They are also easily manipulated or black mailed. If Africa is to emerge, it must act together, unfortunately it cannot.
Even in the East Africa region where there is a lot of traditional commonality and a common market, the disunity does not allow joint economic effort. Uganda and Kenya and Rwanda are members of the East African Community but Kenya choses to buy maize from Mexico rather than from Uganda! Rwanda choose to close its boarders with Uganda bringing unwarranted suffering to ordinary people in Uganda and Rwanda. Working together is key to the future of African countries. Can such people act together to take advantage of the benefits of economic integration? The East African countries would have worked together to produce masks, gloves and test kits in difficult time. But they didn’t. they are importing those unsophisticated products. They would have their scientists working together. But each country is working alone! Only Smart African countries that have good plans will emerge to take advantage of the available technologies to increase productivity and production. This will be irrespective of a country’s current competitive advantages. Economic success will come out recognizing the opportunities availed by the new technologies. Acting together for a wider market and distribution of resources will be a major advantage. Africa must change and adopt these new strategies and technologies. But how? Africa has to think of the following.
What should Africa do?
Africa must have a holistic approach to its economic affairs. Acting in silos, will not help African development. It should intensify the economic integration and plan industries and other economic units as sub-regions or one region. This will give Africa the huge market it desires to get benefit of mass production. It can adapt technology of the 4th Industrial Revolution with ease. Unfortunately, we have paid lip service to economic integration. The African Union has plans for African wide development programme. Do individual countries even know what is happening there. The silo mentality is what lead to Uganda never formally trading with her vast rich neighbor in the west, Congo.
Africa has to redefine its agricultural sector, the small holder sector say in Uganda, is only temporary. It can only lead to more poverty and more balkanization of land unless reformed and supported. Diving land further is untenable. Governments in Africa must improve the productivity of small holder farms through better technology and ensure that what they produce is sold at a reasonable price and processed for value addition. Value addition is a source of new jobs, the factory job, the job that gives a steady income. Giving a good price to farmers works better than distributing seeds which farmers think are political rewards. Africa will also need large high-tech farms. These farms can be nuclear farms with small farmer out growers. But this must be thought through. The 4th Industrial Revolution technologies must be adapted in Agricultural too.
Africa needs to put everybody in schools. Education is crucial. Even when you are poor you too can sleep decently. You don’t sleep in the mud because you are poor. This is the nature of our schools. Because we are poor, we let them rot. We wait for loans to improve the schools. When the money comes, it is stolen! Taking advantage of the resources around us, we can provide decent schooling to our children. In schools emphasis should be on keeping the girl child longer in school. Pregnancies before the age of 15 are unwarranted and create more poverty within the population. Emphasis on science in schools should be a priority and returning technical education in the main stream schools should be a priority. Education will change Africa. But it must be well thought at. How many engineers and which type, how many doctors, how many computer scientists. This must be deliberate. Reform of education and putting emphasis on science and technology will enable Africa understand the 4th Industrial Revolution and be part of it.
The high level of development the world enjoys today was delivered by capitalism in pursuit of profits. Entrepreneurs are very innovative and competitive, they have given us this endless line of products and service that have made life easy for us. But capitalism has a dark side. The unfettered pursuit of profit leads to ups and downs in an economy that now and again result into economic misery. But it also creates the permanent underclass in the economy. The lifting of over 700 million people from poverty in China in the last 20 years could not have been achieved if the Chinese government had pursued a purely free market economic system. China combined the free market system with state-controlled direction.
This is what Africa needs to do. Free markets are important but Africans up to now have not shown their capacity to succeed in a liberalized environment! Evidence in Uganda. In the banking sector 80% of deposits are controlled by foreign banks. (For your information the majority of shareholders in DFCU are not Ugandans), in the insurance sector, Uganda owned companies are on the fringe. In manufacturing, industries possibly the good old Mulwana family, Wavamuno and a few Ugandan Indians hold the Ugandan flag. The rest of other industries are owned and controlled by foreigners. In telecommunications MTN the biggest company in the country along with others, Airtel are foreign owned. In construction key projects are done by foreigners.
Ideological shift in Africa?
Macro-economic policy does not mind who owns the business as long as jobs are created and goods and services are provided. Uganda’s economic growth has been a result of these policies. The challenge is the underclass that is built over time and the discontent among ordinary Africans. This will distort the growth patterns with time hence the need to involve Africans in the economic affairs of the country. Africa must continue to use free market economy policies to drive growth. But there must be a systematic plan on where foreign capital should play a role. China has western companies in its economy. They drive growth and provide the competition required to spur growth of Chinese companies. A thoughtful selection of what foreign companies can do in Africa will give Africa advantageous growth.
There is need for some additional control in licensing foreign investors. Foreign investors should bring some real money in the economy! Capital of less than US$ 5-10 million should not be accepted. We should avoid foreigners entering small retail shops business. Many African countries through corruption and poor laws have allowed a flood of unskilled Chinese and Indians in their countries. There must be tight laws on what kind of skills are required, Uncontrolled inflow of foreigners in African countries will lead to class formation. It may backlash and in future lead to racial intolerance and clashes.
African governments should make arrangements to take shares in big companies which shares should then be sold out to ordinary Africans. Of course, there is a challenge with this, who are these ordinary Africans. You need a good mechanism to control a few people taking over shares in the big companies especially when the source of their money is corruption. This is an act of nationalization of organizations which has been done before in many African companies but abandoned with privatization. It must be handled properly showing benefit to the original capital owners. Participation of ordinary people in ownership of organizations will be important in the survival of such organizations.
Another strategy by governments is establishment of government owned companies that should within a certain time frame be floated on stock exchange to ensure that there is a wide distribution and ownership of shares thought out the countries. It is surprising that while we continue to use the ordinary hoe in Uganda in agriculture we actually import it. It is surprising too that the bicycle is a key means of travel especially in rural areas but Africa still import it and all its components. In recent years the boda boda has proliferated in Uganda and we continue to import all parts on it. What a shame? Robotics would help in having such products provided in the country. This is the 4th Industrial Revolution Technology.
Travelling into African capitals by air you see the predominance of usage of iron sheets. They are a symbol of progress. But we import sheets and turn them into iron sheets for housing! There are hundreds of other products that Africa uses in day to day lives that can be produced locally. But because there easy to import we import them and make quick profits. We should identify there items and produce them. It is not surprising that in Uganda our exports fetch 2 billion dollars and imports are 6 billion dollars annually. To cover that gap, IMF must continuously lend us money.
Another key factor that will drive growth in Africa is addressing corruption. Corruption is a leakage in the resource of a nation. Roads have not been constructed because the money was stolen or we get poor roads or smaller sized roads because the money is stolen. This is also in many other sectors. Like Coronavirus, corruption in Africa is a pandemic!
As the coronavirus is tamed, when it is tamed, African governments must come up to support the selected existing industries. Some will definitely die, others will restructure others will require that life support from the government. African governments have to style up. This upcoming change is driven by the Coronavirus and other technological factor is opportunity to have major changes that will improve lives of Africa. They must plan where they want to go and pursue that. Africa Wake Up. (As I close nobody has a monopoly of knowledge I believe Ugandans can continue to contribute to this debate).
Waswa Balunywa, is the Principal of Makerere University Business School (MUBS), a public institution of higher education in Uganda