Growth Priorities for Nepad

Image: Flickr, David Brossard
Image: Flickr, David Brossard

WE BEGAN this study with the question: How should Africa choose between its many needs, given limited financial resources, and to what extent should business imperatives influence the setting of development priorities?

Our research, and the other studies we consulted for this report, identified two consistent themes: Get the basics right and focus on programmes that spur growth.

Social spending is essential to political stability. But the decrepit state of Africa’s infrastructure suggests that government spending has shifted too far toward current consumption and too far away from maintenance of the physical assets essential to commerce and development.

The following is a partial list of ideas that would define a pro-growth African agenda from a business point of view. It draws on the findings of the preceding pages, as well as two other studies conducted by the South African Institute of International Affairs: Integrating Prosperity: A Business Plan for Southern Africa and The Experience of South African Firms Doing Business in Africa: A Preliminary Survey and Analysis. (Both are available on request by e-mail.) All the surveys note that ending conflict and solving political instability are prerequisites to accelerating growth in Africa and reversing the continent’s economic marginalisation.

Reform Legal Systems

  1. Fight corruption at all levels with effective and transparent institutions.
  • Install genuinely independent, well funded anti-corruption authorities with the power to prosecute without political interference.
  • Strengthen the powers of banking and financial regulation to stop the laundering of illicit funds.
  • Improve legislative oversight by a) increasing the powers of parliamentary budget committees and auditors general; and b) ensuring that they have sufficient staff to investigate improper spending within months of the end of the fiscal cycle, rather than years.
  • Improve public access to information on government spending.
  • Publicly disclose political party financing.
  • Require politicians and senior civil servants to fully disclose their wealth and business interests before and after each term through a register open to all members of the public.
  • Adopt and enforce internationally accepted policies on conflicts of interest and transparent management of tendering.
  • Require full disclosure of all fees paid by oil, gas and mining companies to government. Pass laws requiring that any company operating in any African state fully disclose all fees and bonuses paid for exploration and development work worldwide.

2. Build fair, efficient and transparent legal institutions: Reform the full range of legal and regulatory institutions that          commerce depends upon courts; debt-collection processes; tax assessments; business-licensing procedures; and    government-tendering practices. Identify the length of current backlogs and set clear targets to improve the speed and  efficiency of regulatory and judicial systems.

3. Expand private land ownership and simplify land-purchasing procedures: Establish a free market in land ownership with a     proper land register and security against claims of ancestral ownership. Phase out communal land systems to enable          people to sell and borrow against the value of their land. Begin by formalising owner-ship rules in urban and peri-urban    areas.

Improve The Business Environment

4.Adopt Africa-wide macro-economic and deficit-reduction targets: Demonstrate a commitment to fiscal discipline by    adopting a pledge to maintain single-digit inflation and budget-deficit targets while reducing interest rates to affordable    levels.

5.Remove trade bottlenecks: Set an Africa-wide target of one-hour customs clearances at border crossings. Computerise port  and airport customs posts under private management contracts to eliminate corruption and improve revenue collection.

6.Build genuine one-stop investment centres: Properly fund, staff and empower national investment centres to improve the  speed and efficiency of procedures for starting new businesses.

7.Eliminate restrictions on the movement of skilled labour: Streamline work-permit rules to allow top managers,    professionals and technical experts to find work anywhere on the continent.

8.Reform education aggressively: From primary to tertiary levels, curricula are still largely based on colonial models and are  not specifically tailored to the kinds of jobs available. Focus curricula on developing needed artisanal, managerial and  technical skills required in modern economies. Create tuition incentives to expand the number of students enrolling in  scientific and technical subjects at secondary and tertiary levels.

Emphasise Infrastructure

9.Accelerate privatisation or management concessions on key infrastructure: Privatisation – and the use of management  concessions – has dramatically improved quality of service and captured major private-sector investment in  telecommunications, road, rail and port sectors. Every dollar of private investment frees up a dollar of government funds for  other vital needs. Privatisation in telecommunications also speeds up the diffusion of new technology.

10.Prioritise maintenance: Create public-private supervisory boards with industry participation to ensure that roads are  repaired and machines kept clean. Reform auditing and tendering rules to ensure transparency.