Management and industrialisation in Africa

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By Daniela Scur and Nicolas Lippolis, University of Oxford


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
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Africa-IndustrialisaionThe manufacturing sector has traditionally been seen as an engine for development due to its high propensity for productivity gains. Worryingly, recent evidence suggests that this has not been the case in Africa.1 One important determinant of firm productivity is the quality of management practices, and new data sheds light on the state of management in some African countries.

Management around the world

For over 12 years, the World Management Survey (WMS) has been collecting data on management practices using an interview-based methodology. It defines 18 key management practices and scores them from worst practice (1) to best practice (5). The focus is on such practices as monitoring, target-setting and incentives/people management. Research using this data suggests a strong correlation between management and a series of productivity measures – such as firm size, profitability, sales growth, market value and survival. Experimental evidence further confirms a positive correlation.2 Continue reading

Biases in entrepreneurship and industrial policy in Africa

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By Wim Naudé, Professor in Business and Entrepreneurship in Emerging Markets, Maastricht University, Dean of the Maastricht School of Management, The Netherlands, and Research Fellow at the IZA Institute for Labor Economics, Bonn, Germany


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
Register to attend


shutterstock_415121221.jpgAfrica has failed to industrialise. At the same time, millions of young people are seeking jobs. Put one-and-one together and the answer seems to be that if these labour market entrants become entrepreneurs in industry then they can in one stroke create jobs and help Africa industrialise. Yet, optimising the nexus between entrepreneurship and industrialisation requires overcoming some vexing policy biases. These can be categorised as biases of over-estimation and biases of under-estimation.

First, industrialisation’s job-creation potential is often over-estimated. The world is in a Fourth Industrial Revolution (4IR) driven by technologies such as the Internet of Things, automation, additive manufacturing and big data analytics (see Naudé, 2017). These technologies are causing the loss of low-skilled routine jobs, of which Africa has a disproportionate share. It’s estimated that up to 66% of all jobs in developing countries are at risk. Relatively poor African countries such as Ethiopia are at a particular risk of having around 44% of current jobs susceptible to automation. The 4IR is furthermore leading to a ‘re-shoring’ of manufacturing back to advanced economies. This is to the detriment of low-wage labor in African and other developing countries. As Culey (2012) points out: How important is low-cost labor when you don’t actually need labor?
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Excessive informal sector: a drag on productivity



By Aleksander Surdej, Poland’s Ambassador to the OECD

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Photos by Victor Jiang / Shutterstock

The informal economy remains a problem when we discuss the prospects of economic development. It is perceived as a hindrance to economic progress because the informal sector does not pay taxes, does not include its employees in social insurance schemes and does little to offer labour law protections. Increasingly, various researchers (La Porta1, Shleifer2, 2014) and international organisations, like the OECD, converge in seeing the informal economy as an obstacle to economic development due to its imminent low productivity. Indeed, informal businesses are concentrated in low productivity sectors. They are, on average, smaller and hence less productive. They generate lower value added. They pay lower wages to their employees and do not train them. And the owners of informal businesses manage their firms less efficiently than their better educated formal sector counterparts.

The informal sector is hence both a symptom of economic backwardness and a drag on economic development. But, can this apparent vicious circle be broken, or is it an economic policy donquichottean task?

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Electricity for all in Africa: Possible?

By Bakary Traoré, Economist, Sébastien Markley, Statistician, and Ines Zebdi, Research Assistant, OECD Development Centre 1 


Explore the 2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa for more on this subject


Electricity-in-Africa-shutterstock_563620138For decades, access to electricity has been a serious challenge in Africa. It still is. 600 million Africans are not connected to an electrical network. African businesses cite electricity amongst the two most severe constraints on their operations (Enterprise Surveys, 2016). Twenty-five of the 54 countries in Africa, including Nigeria, South Africa, Ghana and Senegal, deal with frequent power crises characterised by outages, irregular supply and surging electricity costs. These are symptoms of insufficient generation capacity and a lack of infrastructure.

Despite these sobering facts, a number of recent initiatives signal that major improvements may be underway. The impetus to act is driven by the benefits Africa can reap by investing in electrification. Such benefits go far beyond direct job creation in energy infrastructure, as important as that is. Several pieces of evidence (Jimenez [2017], Torero [2014], van de Walle et al. [2013]) suggest that household electrification also increases job opportunities by carving out more time for work and enabling rural micro-entrepreneurship. We see three reasons for hope that Africa is on the path to greater electrification – provided certain conditions are met.

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Strengthening Regional Agricultural Integration in West Africa

By John Staatz, Professor Emeritus, Dept. of Agricultural, Food and Resource Economics, Michigan State University

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Photo credit: Ryan Vroegindewey

Soaring and volatile international food prices since 2007-08 have forced West African governments and their development partners to translate their long-standing rhetoric about support for West African agriculture into concrete programmes. Doing so effectively, however, has proven much more challenging than simply meeting the Comprehensive Africa Agriculture Development Programme (CAADP) goal of increasing the share of national budgets and donor funds dedicated to the agricultural sector. A recently released joint study by the Syngenta Foundation for Sustainable Agriculture (SFSA) and Michigan State University (MSU) draws lessons from such efforts over the past 10 years and suggests ways in which policies and programmes can be more effective in helping West Africa feed its young, burgeoning and increasingly urban population. Research by MSU, SFSA and West African scholars provides a number of crucial policy insights. Continue reading

Where to start with the SDGs?

By Simon Scott, Counsellor, Statistics Directorate, OECD; Jeff Leitner, Fellow, New America and Managing Director, GreenHouse; and William Hynes, Co-ordinator, New Approaches to Economic Challenges programme, OECD

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“The SDGs as a network of targets,” from David Le Blanc, “Towards integration at last?”, DESA Working Paper No. 141 ST/ESA/2015/DWP/141

The upside to the 17 Sustainable Development Goals (SDGs), signed off at a UN Leaders’ Summit in September 2015, was their inclusiveness. An Open Working Group of 30 nations worked for two and a half years to develop the Goals, meeting 13 times, sometimes for a week, and organising countless national and thematic consultations, stakeholder forums, and on-line and door-to-door surveys. Almost everyone who wanted a say in the SDGs could have one, and more often than not, their voices were heard.

This led to the downside of the Goals – their sheer breadth and volume. The Economist satirised the litany of SDG targets as “the 169 Commandments” – a line perhaps inspired by Bill Gates’ comment that the SDGs resembled the Bible, and that he would prefer to start with something simpler, “like the Ten Commandments.”

Two years later, the world has moved on to implementation. The UN, national governments and international organisations are all retooling to help the world achieve the SDGs. And the available resources, while not limitless, are very substantial. Official development assistance from OECD countries alone now exceeds USD 140 billion a year, and private philanthropy from NGOs and foundations is also increasing. Trillions of dollars are held by sovereign wealth funds, pension funds and private endowments with an interest in long-term stability and sustainable development.

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Infrastructure, jobs, good governance: Bringing Africans’ priorities to the G20 table

By Michael Bratton, University Distinguished Professor of Political Science and African Studies at Michigan State University and senior adviser to Afrobarometer, and E. Gyimah-Boadi, Executive Director of Afrobarometer and the Ghana Center for Democratic Development

 

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Beyond the limelight and the headlines, the recent Group of 20 (G20) summit accomplished an important piece of business by launching the Compact with Africa. The next step is crucial: negotiating the priorities that the compact will address.

One key concept is that the compact is with – rather than for – Africa, implying that it will rely on true partnerships to pursue mutually agreed-upon goals.

With its contribution to a “20 Solutions” document presented to the G20 by a consortium of think tanks, the pan-African research network Afrobarometer is working to ensure that the compact will take into account what ordinary Africans say they want and need.

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