AFRICAN VISIONARY

Is legacy the epicenter of president Obama's visit in Africa?

2013-06-29T23:56:00.000+02:00

At the media briefing's Q&A organised for the visit of president Barack Obama in South Africa, following diplomatic presentations both presidents and an earlier meeting held at the Union Buildings (South Africa's government complex), a journalist stood up and ask South Africa's president, Jacob Zuma, what he thinks would/ should be Obama's legacy in Africa.

President Zuma quipped diplomatically in his response that it is his principle not to pronounce on legacies of people who are still in office. He may have been witty in his response, but it is matter that he, and Obama himself, know is a point at issue for Barack Obama's remaining three and a half years in the White House. In fact, it is a desirable outcome, not only of South Africa, but the entire African continent for Obama to leave some kind of legacy in and for Africa given his emergence to presidential power in 2007 and his chronicled roots in Africa.

Obama has no choice but to rise to the occasion. Let me qualify this: Bill Clinton has AGOA. George W. Bush has PEPFAR and the MCC. So far, Barack Obama has made a start on food security, but nothing legacy-worthy yet. The Carnegie Centre for Global Development (CGD) has made it easy for Obama to begin crafting his legacy. CGD has suggested that Obama's focus should be on electricity/ or energy in general and thus culminate in some worthy course that would be his legacy. The think tank suggested three reasons why electricity should be Obama's legacy in Africa. I personally agree with CGD with no hesitation. As Obama searches for legacies in Africa, this should be one area that the policy makers at the White House need to pin their pens and thoughts on. The dire shortage of electricity in the African continent is a constraint for businesses and investments and as a result renders unproductive economic activities. So Mr. Obama, you now have some alternatives to chose from and develop for the next three and half years at least at a policy level. The next generation of American leaders will implement it for you. And that would be your legacy, at least in and for Africa.

"The Meltdown Of The West": A Crucial Historical Juncture Upon Which Africa Should Take A Leapfrog

2012-08-14T00:49:00.000+02:00

History is pregnant with lessons that African leaders should, once and for all, take leaf out of these lessons and perhaps turn a blind eye to economic growth hypotheses and economic development policies that never worked to rid the continent of its socioeconomic-ills. A simple strategic insight and taking a thorough stock of the current geopolitical shift and sway them to benefit Africa may be the right medicine at the right time. Lessons of how developed countries leaped out of critical junctures and historical contingencies when they were in the state of development are in abundance. Acemoglu and Robinsons, in their seminal book "Why Nations Fail" trace critical junctures from the fourteenth century outbreak of the bubonic plaque, the Black Death in 1346 to the England political revolution of 1688, the Glorious Revolution. They demostrate without any mathematical or complex economic model of how these critical junctures correlates to sustainable economic growth and prosperity. A critical juncture is a major confluence of factors disrupting the existing economic or political balance in society.

ROME - Historic International Agreement on Tenure of Land, Fisheries and Forests

2012-05-11T21:53:00.001+02:00

At its Thirty-eighth Special Session held on 11 May 2012, the Committee on World Food Security (CFS) of the UN Food and Agriculture Organisation (FAO) endorsed the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security. These guidelines They were developed by the open-ended working group in sessions in June, July and October 2011 and in March 2012. They are based on an inclusive process of consultations that occurred during 2009-2010. According to FAO these Guidelines are consistent with, and draw on, international and regional instruments, including the Millennium Development Goals, that address human rights and tenure rights.

The aim of the guidelines is to promote food security and sustainable development by improving secure access to land, fisheries and forests and protecting the rights of millions of often very poor people. "Giving poor and vulnerable people secure and equitable rights to access land and other natural resources is a key condition in the fight against hunger and poverty. It is a historic breakthrough that countries have agreed on these first-ever global land tenure guidelines. We now have a shared vision. It's a starting point that will help improve the often dire situation of the hungry and poor," said FAO Director-General José Graziano da Silva.

"These guidelines are the product of a three year, inclusive process of consultations and negotiations that brought together many stakeholders and ensured that a wide range of voices were heard," said Yaya Olaniran, current CFS Chair. "The result is that we have a meaningful series of principles and practices that everybody — countries, the private sector, farmers, civil society — can stand behind and support, and that will work out in the real world." It is now up to the countries who endorsed the guidelines to put them into practice on the ground, according to Olaniran. "These changes won't happen overnight. But we also know. as a result of the extensive consultations by FAO and the CFS-led negotiation process, that there is a lot of buy-in and support for the guidelines. The CFS endorsement lends them legitimacy and strength, and all the countries involved are ready to take them on board," he said.

Sub-Saharan Africa’s Economic Growth Is Poised For Acceleration - New World Bank Report - April 2012

2012-04-19T17:20:00.001+02:00

According to the new World Bank report on Africa's economy - Africa's Pulse - released on Wednesday 18 April 2012, economic growth in Sub-Saharan Africa (SSA) remains strong and is poised for lift-off after growing at 4.9 percent in 2011, just shy of the pre-crisis average of 5 percent. Excluding South Africa, which accounts for over a third of the region's GDP, growth in the rest of the region was 5.9 percent, making it one of the fastest growing developing regions.

Taking advantage of being in the "wrong place" (Africa) at the right time (21st century)

2012-04-16T22:32:00.000+02:00

In the last two decades when the North American and European newspapers described Africa as the "hopeless continent", no one at the time could have anticipated that in the next twenty years, Europe will be in economic turmoil and the US will be running into trillions of dollars in debts surpassing the debt ceiling. Today, the world newspapers are covering the opposite. The North is the victim of its own success and the South is pregnant with opportunities. Wolfgang Fengler, the World Bank's Lead Economist in the Nairobi Office of the World Bank covering East Africa, puts this into perspective in his article entitled 'big shifts and what they mean for Africa and Kenya'. There's no doubt that a sizable number of countries in the African continents are virgin territories from economic perspective as massive mineral resources are yet to be exploited.

Jim O'Neill, the founder of BRIC nations acronym, whether by design or default, omitted the continent as the emerging market giant, and as an economist running an arguably largest investment bank, could not forecast this phenomenon. As things stand, he lost the drive of his 'invention' as the nations he grouped are pursuing their own agenda than the one he sought to achieve and proof. The very same nations are recognizing the African continent as the key market for future growth of the global economy. Nationwide Finance, the US-based private placement lending facilitator, sees the African continent offering many opportunities for new export and import markets. For investors positioning themselves in Africa while the continent is addressing its own challenges amid remarkable GDP growth rates in the last decade relative to the developed and other emerging markets, are in for a good treat in the long-term. For them, it is the investment appetite and marketing principle of taking advantage of being in the wrong place at the right time.

South Africa leads the pack in Africa on the Ease of Doing Business

2012-04-13T21:27:00.000+02:00

On Wednesday the World Bank and International Finance Corporation (IFC) released the "2012 Doing Business Report. The 200 page report highlights the remarkable progress made by the economies in the Sub-Saharan Africa region on the ease of doing business. It reports that a large number of economies in Sub-Saharan Africa reformed business regulations in 2010-11.

What's the real meaning of "African solutions for African problems?

2012-03-29T21:55:00.000+02:00

There is no doubt that with one billion inhabitants and abundance of natural resource endowments, the 21st century is for Africa. Political transitions of the past two decades, remarkable economic growth rates and resilience to the global economic crisis are instructive. The continent has caught the attention of the old and new masters of global wealth. How should Africa respond to this attention and take advantage to place the continent on the global stage. There's an ideal founded as far back as 1967 that has become a cliche, i.e. African solutions for African problems. What does it mean exactly? Read more

Nigeria's jobless growth - What does it say about the nature of growth?

2012-03-28T22:36:00.000+02:00

According to the Renaissance Capital's recent report, the low labour-absorptive capacity of growth implies the poverty headcount and income inequality in Nigeria are rising. Nigeria’s jobless growth suggests that the sectors that have emerged in recent years and driven the country’s strong growth are not job-creating. Just over half (54%) of Nigeria’s population lives below the poverty line, according to the United Nations Development Programme’s Multidimensional Poverty Index. Such a high incidence of poverty implies that socially inclusive or participatory economic growth is critical. Nigeria’s economy grew at a stellar average rate of 8.8% pa in the 10 years to 2011; but concurrently, unemployment increased sharply from 13.6% to 23.9% over the same period. This shows that strong growth has not been sufficient for job creation in the formal sector, or by implication poverty reduction. Moreover, it suggests that as the size of Nigeria’s economy has increased, the share of the workforce in gainful employment has declined, implying growing income inequality.

Africa time to shine is now!

2012-02-14T01:19:00.000+02:00

“Europe is in a mess, Africa is in a new growth phase”. Well, it is a known fact the Africa's time has arrived and perhaps, for sometime. So, the less the talk and talk and more action action so that results speak for themselves, the better and nearer is Africa close to the growth vision. Read more

Why is China's growing role in Africa a concern?

2012-02-14T00:25:00.000+02:00

The economic penetration and increased investments of China in Africa is not an uncommon global economic development phenomenon. Industrial revolution following World War II emerged and evolved through the practice and application of classical economic development models such as Ricardian comparative advantages and other neoclassical economic growth theories.

Barriers blunt trade within Africa - World Bank

2012-02-09T19:33:00.000+02:00

To leverage on the huge potential to build a competitive and world-class continent, Africa's political leaders have to think beyond their short-term gains of political and self-serving privileges. They should begin to shift from a political rhetoric that is paralytic to an action driven leadership that is authentically beneficial to the people of Africa. We need leaders with a strong political will, unorthodox and truly servant leaders to build a lasting continental legacy for current and future generations. Maintaining status quo potentially perpetuates a political paralysis with backward economic development leaving the continent a breeding ground for exploitative capitalists while African people are watching and remaining in dire poverty.

According to Obiageli Ezekwesili, World Bank vice president for Africa and a former Nigerian Minister, it is clear that Africa is not reaching its potential for regional trade. She adds that African leaders must now back aspiration with action and work together to align the policies, the institutions and investments needed to unblock (trade) barriers. Trade barriers and red tape are a breeding ground for corruption and stifle economic progress. Read More

The role of the middle class in the burgeoning Africa's economy

2012-02-08T18:49:00.000+02:00

There's no doubt that, with effective institutions, improved financial markets, trade liberalization, respect for the rule of law and political stability, among others, the 21st century is for Africa. The continent is endowed with a plethora of natural resources which has and always been the envy of the world. Technological, infrastructural and human capital development are on the policy radar of many African states and policy makers.

It is a known economic fact that one of the key growth features in any economy is the presence of the market. Africa has these untapped markets in abundance. Empirical evidence and vast economic literature points to the rise of the middles class as one of the economic growth drivers in a developing market and vise versa. According to the African Development Bank's "The Middle of The Pyramid: Dynamics of The Middle Class in Africa" report released in 2011, the number of middle class Africans has tripled over the last 30 years to 313 million people, or more than 34% of the continent’s population. The reasons for the increase in size and purchasing power of the African middle class include strong economic growth, and a move towards a stable, salaried job culture and away from traditional agricultural activities. The report maintains the growth in the middle class is good news for the future prosperity of Africa, but also points out the continued high levels of income inequality on the continent. The continent has a extremely rich elite: ‘About 100,000 Africans had a net worth of USD800 billion in 2008, or about 60% of Africa’s GDP or 80% of sub-Saharan Africa’s’.

The efficacy of a sustained democratic order is based upon its strong civil society and how it engages with the powers of the political order. My narrow research and personal observation points to a weak organised civil society in the African continent. Of course, there are active civil society groups that have and are playing a critical role in the development of the continent. However, the major weakest link is in the active involvement, or lack thereof, of the middle class in the sustainance of effective democratic order. The independent mobilisation of the middle class through organised civil groups could play a significant role in enforcing and keeping governments accountable to implementing policies and public programmes for the benefit of the general society. After all, the middle class is one of the active and major contributors to public resources through paying taxes. Africa's middle class should exercise this public right as legitimate civil servants through active civil engagements with the powers of the political order. Active civil society is the key measure and propeller of a living democracy and contributes towards a sustained democratic society.

The lack of such active involvement by this key group in the society leaves a room for the middle class to be "commoditised" - as consumer class - and exploited by their own governments and rent-seeking capitalists at the expense of society. Politics is not the sole and only platform available as a legitimate right for freedom of association. While politics shape the outlook of a nation, independent institutions are necessary and essential as blind-spots accountability measure for politicians and governments. Accountability is ensured in a democracy by strong independent insitutions and civil society groups. Africa's middle class need to mobilise and organise themselves indicative of the nature and the manner in which the continent converge to its plateau of growth, especially through highly educated and entrepreneurial middle class.

Smartphones vendor shipments reached a record 155 million in the fourth quarter of 2011

2012-01-30T21:55:00.000+02:00

In 2011, Samsung held the number one spot for the first time to become the market leader, in annual terms, with 20 percent of global market share. Apple took the lead by a thin margin of less than half a percent ahead of Samsung in the fourth quarter of 2011. Nokia had a tough 2011. The Finnish giant was at the top spot in 2010 by 33%. Read more on Cellular News.

South African democracy in action - Corruption Watchdog launched

2012-01-30T20:39:00.000+02:00

It is not by default that South African constitution, in black and white, is an admiration of the world. South Africa's transition from the malevolence of apartheid to the contemporary form of governance, in the name of democracy, led by the revered Dr. Nelson Mandela cemented the voyage.

As a young South African, i beam with pride to witness the evolution of democracy from its inception. While the country is bleeding from high unemployment rate, poverty and inequality, the development such as the launch of the Corruption Watchdog by the largest trade union federation, supported by the right and the left, attest to the maturity of the nascent democracy and leaves one with confidence of HOPE. Read more about the full story on IOL

3bn letters of an individual’s DNA can now be read

2012-01-22T19:51:00.000+02:00

When i first read an article in the early 1990's about the Human Genome Project in the US, it never occured to me that during my lifetime i will witness the deployment of technologies that would read the human DNA. After two decades, Life Technologies, a US biotechnology company has announced the first machine that can read all 3bn letters of an individual’s DNA for as little as $1,000 – a development that will greatly accelerate medical treatment tailored to a patient’s genes. But this also raises ethical questions.

In the quest of soul searching - "Human touch" is desmantled

2012-01-20T00:45:00.000+02:00

By Robert Capa's definition i am Generation X (GenX) with a tint of GenY. While i frequently exhange through various social media platforms, i am a proponent of traditional human interface

Analogue to digital switch over: a long-term lost opportunity for Africa

2012-01-19T22:22:00.002+02:00

I occasionally, as i ponder upon my long-term career path, crave an idea of following a direct professional career in government, South Africa specifically and Africa generally. So, i do yearn to become a bureacrat. Yeah, right! Surely, i would'nt entertain this thought if i had no value in mind

Has Microsoft got what it takes to acquire both Nokia & RIM?

2012-01-13T04:25:00.001+02:00

Nokia's CEO, Stephen Elop may have played down speculation that Nokia has been rumored to acquire Research In Motion, the maker of Blackberry, but reality points to open clues.

Africa's prosperity depends on its professionals

2012-01-13T03:28:00.001+02:00

Africa's brain drain has almost become a cliche despite deplorable statistics and ominous reports about this phenomenon since the turn of the 21st century.

Adcorp's Employment Index is baseless and flawed

2012-01-12T01:00:00.000+02:00

How employment/ recruitment/ manpower agencies conduct and analyse their surveys or reports baffles me to my wits end. The report by Adcorp on South Africa's employment index is vague and baseless (http://www.engineeringnews.co.za/article/universities-fail-to-produce-enough-graduates-in-business-oriented-fields-2012-01-10.) Headlined "Universities fail to produce enough graduates in business-oriented fields" by Engineering News'online edition of the 10th Jan 2012, reflects poor analytical ability and senseless judgment.

CSR and the legal principle of "limited liability". Is the latter principle still relevant for a modern corporation?

2012-01-09T19:51:00.000+02:00

As i learn more about the sustainable value of a modern corporation as a responsible corporate citizen, i develop a deeper interest and inquisitive appetite of this global socio-economic phenomenon, i.e. Corporate Social Responsibility (CSR). Since its theoretical development in the 1960's when the first arguements were posited on its relevance to the corporation motivated by profits, it has become a global force to be reckoned with. It is poised to become a proxy for a new sustainable capitalism as Al Gore, the former US Vice-President calls it. Arguements went further to define the meaning of S in CSR. That gave birth to what we know today as stakeholders through the stakeholder theory. Today it is no longer a debate, businesses are painstakingly attempting to fine tune themselves to align.

At the same time, there's one major factor that is not being considered amid the global activism of fine-tuning modern corporations to be responsible. This one factor - limited liability - is a legal principle developed to protect the risk takers (investors and entrepreneurs) in the form of incentive should the opportunity go down the drain or circa. It means owners of production have limited exposure in relation to business risks. According to some eocnomists, this was the best ever piece of a legal principle to be developed in the market economy. We are now in the 21st century and global force of CSR is reckoning. Is this legal principle still relevant? Well, owners of production are protected by this principle in terms of business misfortune. But what about the broader stakeholders? Suppliers and communities in particular. Imagine this scenario which has practically occured during the beginning of the global recession in 2008. Lehman Brothers and other global corporates come to mind.

If we accept that a community is a key stakeholder in a business, what is the form of incentive when a corporation goes bust. I am thinking about this in terms of corporate social responsibility. Isn't the community, as a stakeholder, supposed to be protected by the limited liability. A simple answer may be no, why should the community be compensated because it is not a risk taker in the business? The irony, however, is that when the US government funded various corporations it used tax money to rescue those corporations. So, the community, as a tax payer, rescues the business that it viewed the community as not a risk taker. The big question: Is a legal principle of a "limited liability" still relevant amid the reckoning global force of sustainable capitalism and Corporate Social Responsibility? Your thoughts will be valuable.

Africa - from Vuk'uzenzele to Vuk'uzakhe

2012-01-08T21:24:00.000+02:00

Vuka uzenzele and Vuka uzakhe or, spoken form, Vuk'uzenzele, Vuk'uzakhe are both Zulu expressions. Zulu or IsiZulu in formal expression, is one of the 11 official languages in South Africa. Vuk'uzenzele mean "wake up and do it yourself" and Vuk'uzakhe, "wake up and build yourself". The expressions are commonly used to promote a courageous fortitude for a self-reliant mind-set.

For the past three months having temporarily settled here in Europe, i have been fascinated by the socio-economic and political developments but at the same time dissappointed at the depth coverage, or lack thereof, by European newspapers on Africa, with specific reference to her economic prospects and benefits of her people, inevitably a future for most Western nations. My dissapointment is not so much about the generic coverage of current affairs which are mainly in the political domain and which Africa gets attention. My fret is on the complete absence of profound or perhaps comprehensive coverage on the positive, economic prospects, growth and positioning. At best, the only time i came across a positive "on-your face" coverage about Africa is when i noticed advertisements from a few African corporates and some governments.

Of course i am venting to the media. Let me qualify my fretting. In general Africa is still projected as the poor continent, in 2011, amid private presidential dialogues, presidential visits and trade missions between African and developed countries in the West. This narrow, shallow view and projection about my beloved continent with mountains, rivers and green valleys is mind sapping, as if i dont have such media problems at home either. Media, generally and according to my experience, is a propagandists tool in both business and politics. As a proud African child first and a professional, i am tempted to feel and perceive that i am being taken advantage of.

For every topic about emerging markets, only China, Brazil and India are mentioned. Russia and Vietnam in the waiting. When i look forward to read news segments about BRICS, it's all the same disappointment. The acronym, as universally known, was coined by Jim O'Neill as BRIC (Brazil Russia India China). The S was added after the latter's nations welcomed South Africa in December 2010, to BRICS. As of late, this acronym is spelled BRICs. I first took offence but subsequently took solace that it was a printing error. It dawned on me that it was reality powered by perception of media, of course with influence from elsewhere. To my jolt astonishment, the small S does not even represent South Africa in the acroym, or Southern Africa for that matter, it's a plural letter for the BRIC nations. I give up!

If there's one lesson that Africa should learn from the colonial eras, is to guard against a state of De ja vu, i.e. the second coming of colonialism disguised as Foreign Direct Investment (FDI). We need more visionaries, leaders, our own economists, intellectuals, intelligentsia, entrepreneurs, a plathora of academic researchers and professionals alike. The spirit of African self-reliance is not in any manner suggesting a closed development amid globalisation. It simply denotes a state of saying "we are tired of being robbed and ripped off", we are well conscious of market transactions and can do it without relying largely on external advice. The better part of the 21st cenntury is for Africa!

Emerging markets' sustainable growth through social innovation

2012-01-07T11:59:00.003+02:00

The past decade saw the emergence of a new entrepreneurial class, i.e. social entrepreneurs. This new development, relative to the conventional business practice motivated by rents, is evolving alongside the debates about the redefinition of capitalism as it were. The basis or rather a call for such a redefinition is spawned by the rising need of corporations and organisations alike to respond to societal needs and environment within which they operate. It has been a subject of economic, business and political debate for the past 40-50 years which culminated into what we know today as Corporate Social Responsibility (CSR). Economically, it has been a growing theoretical debates among academics, from business it has been the subject of lawsuits by environmental activists and NGOs to corporates and politically it has been a subject of political debate with its prominence in the Kyoto Protocol since 1997.

CSR, as a concept, has grown both theoretically and in practice from regulations to reporting. Some global companies have been practicing this nascent yet significant concept for the past two decades. The big question is: are companies embedded in the conventional business model in the capitalist market have a place to compete in the new third economy? Hart (1997) distinguished between three types of overlapping economies. The first economy is the market economy, a familiar world of commerce comprising both developed nations and emerging economies. The second economy is the survival economy, the traditional, villaged based way of life found in the rural parts of most developing countries. The third economy is a nature's economy, which consists of the natural systems and resources that support the market and the survival economies. Going back to the big question posed earlier, a follow up question could further be asked as to whether these companies will survive in the nature's economy? While many corporations are attempting to reinvent themselves against the call for a responsible capitalism, which is inevitable, new and innovative companies from the nature's economy are emerging to directly compete with encumbents in the market economy.

The conventional business models, given the sunk costs, are difficult, but not impossible, to adjust and flexibility in their operations is viewed too cumbersome to switfly take opportunities in the survival economy. Fundamentally, business strategies in the market economy define markets as "viable" segments pagging the survival economy on the margins outright. The market players in the nature's economy are the ones that stand to gain competitive advantage through social innovativeness. These type of entrepreneurs are not defining their markets as "viable", they define their markets as the positive social and environmental impact that sustain the livelihoods of societies in which they operate. Interestingly, this social entrepreneurs are largely not driven by profit motives but by the sustainability of their businesses, the environment and the societies in which they operate. While they may not be motivated by rents, to a large extent, empirical evidence has shown that these entrepreneurs do make good profits. There are a number of examples cited in the media and literature about the success of such entrepreneurs. Their source of business growth is nothing else but social innovation, which is embedded in their business strategies. Surprisingly, these businesses are Non-Government Organisations (NGOs). This attest to the narrowing gab between for-profit and not-for-profit entities.

As the market players in the market economy adjust and convergence between the private sector, environmental activits, NGOs and society at large looms, capitalism in its narrow sense dissipates and a broader view inevitably emerges. It is evident through this developments that the most innovative economic entities will emerge from the not-for-profit sector for a foreseable future due to focus on generating new ideas on how to consume products and services sustainably as nations. Emerging economies cannot afford to repeat the mistakes of Western developments. Achieving sustainability will require stabilising or reducing the environmental burden. Simply: Pollution = Innovation. An irony of the century, at least in my opinion, supporting Hart's view, is this: to some extent the greening of the developed world following Western industrialisation has been at the expense of the environments in the emerging markets. Because industrialisation has focused initially on commodities and heavy manufacturing, cities in many emerging economies suffer from oppresive levels of pollution. The pursuance of this simple but yet powerful sustainable function is the impetus of growth for emerging market economies. Entrepreneurship opportunities resurfaces across the entire businesses' value chains.

Let the sleeping dogs lie: a case of Saudi Arabia

2011-11-25T18:53:00.001+02:00

The 21st century is to be marked with a turn of socio-political and economic events that could spawn unprecedented economic revolution into the 22nd century with enormity and speed as twice as those seen during the Industrial Revolution. The rise of the developing countries like the grouping of the BRICS nations is just the end of the beginning and the tip of the economic revolution ice berg. Unlike in the late 19th and the early 20th century when only a few countries hurdled themselves out of the quagmire following cold wars, world wars, oil shocks and other calamities, the 21st century is breeding vast economies into a wealth of nations.

I depict this viewpoint from an inspiring piece of article i picked from the European edition of Financial Times today. Essentially, this article hoisted my nerve wracked with a little sense of jelousy when i think back that why is my country, South Africa, not moving with the same political will as this country. Notwithstanding, i was filled with a sense of pride that other countries are doing the best for their citizens and that instilled hope in me. The article by Michael Peel, reports that Saudi Arabia is investing $6bn to train professional elite. This investment was spent in a single fiscal year, 2011, on foreign study scholarships for almost 250,000 students and family members. The scholarship covers, not just tuition fees but also other items such as living allowances, medical insurance, and flights to and from home. The spend average about $25,000 a person this year. This is part of a huge public spending programme being rolled out amid turmoil in the wider Middle East. I draw inspiration from the Saudi's minister when he expressed that this education investment could help transform Saudi society by giving a needed boost to its cadres of engineers, lawyers, doctors and IT specialists. That is a socio-economic investment with depth. Coincidentally, just over a week ago, one of the global Italian industrial and enginnering company, Tenaris, presented to us, as part of my MBA Programme, the challenges it faced in setting up its business (manufacturing plant) in Saudi Arabia. Part of their challenge was the cultural "shock" of the Saudi Arabians when it comes to employment. And this is as recent as 2010. The first shock, apart from the challenge in language, which is Arabic, almost the entire workforce in Saudi Arabia is foreign and expats and secondly, no woman is working, that is the culture. There is a shockingly high level of skills shortage that Tenaris has to bring its own worforce across the globe. Due to its strategic innovativeness and global competitiveness as a business, Tenaris, pioneered a few changes in the manner in which Saudi Arabia looks at itself in the context of globalisation, particualrly from business perspective. Tenaris was the first company in Saudi Arabia to higher a woman in its executive and the first to higherl local Saudi Arabians as a private entity in 2010.

The most striking factor, that thrilled me was the expression by the finance minister, Ibrahim al-Assaf, that the wealth in Saudi Arabia, has been spread over the population on housing, welfare, free education, free health, scholarships outside for all citizens. He says the scholarship programme is aimed at correcting a past failure to focus "on the right skills and the right education". Some observers say the scholarship programme could influence the country's political direction when the students come back home. Indeed, economic theory suggests the the rise of economic growth and increment of political stability is attributable to the growth of the middle class and the welfare of the entire population. The programme runs alongside large investments in infrastructure and social benefits. Unemployment benefit payments of $533 a month are due to be implemented after the Islamic new year this week, and public sector workers have received a bonus equal to two months' salary.

While the reforms points to the promising nation, the case of Saudi Arabia is one that has been the subject of economists for centuries. The economy is state led and it faces other drains on its finances, such as its notoriously heavy domestic energy consumption. Subsidies keep petrol so cheap that residents can fill a small car for as little as $10. Saudi Arabia should pursue economic reforms that are sustainable and globally aligned to infuse flexible economic measures resilient to intermittent financial and economic shocks. Economists' analysis may have the essence of truth, by my personal verdict is out: the investment in education will sustain that nation!!!

Fostering economic growth through entrepreneurial development in the formal sector

2011-11-13T13:49:00.001+02:00

In less than three years, South Africans will be celebrating the second decade of democracy. That year will be a fifth democratic elections and perceptively an election to be marked a new dispensation of democratic order since 1994. In the past decade and a half, government developed and arguably implemented various set of policies and strategies that aimed to rid the scourge of socio-economic ills created by apartheid regime. The advent of the democratic dispensation in 1994 marked the victory by the majority of the people in the republic manifested in the political power led by the African National Congress (ANC). It is an open secret, however, that the attainment of political power, to date, has not liberated the very same majority economically. Hence the infamous and quoted phrase that "political power without economic liberation is meaningless". As such, strategies and policies aimed to eradicate and eliminate poverty, inequality and unemployment have been developed and attempts bandid upon to implement them. While progress is noted thus far with remarkable achievements in other developmental areas, government should not claim to have been successful. The marking of the 20 years into democracy should at most be considered as the accumulation of knowledge, experience, lessons learned and employment of trial and error.

The implementation of socio-economic policies that were developed in the past decade and a half have not helped to a level that is satisfactory to the majority of the citizens. I must hasten to state that South Africa is well respected globally for her knack to develop relatively sound policies, of course except education, and an attempt to be globally competitive in various areas. However, implementation has always been a challenge. This is manifested in various statistical sets. My speficic interest, for the purpose of my arguement, is job creation and entrepreneurial development. These two issues play a critical role in reducing unemployment and fostering economic growth.

The focus of government policies on entrepreneurial activity leaned more towards the aim of reducing unemployment at the expense of economic growth was a miss. Entrepreneurial development without economic growth as the end in mind is not sustainable. The sustainability of entrepreneurial activity is relatively ensured if there's growth in the economy. As a result, the extreme focus by government on the informal sector as a means to alleviate poverty was a good social plan, but not a grand plan to spawn economic growth and such a plan doesnt result in economic growth. The plan of alleviating poverty by encouraging everyone to be self employed is a fallacy. The fact is, not everyone who is unemployed and want to pursue self-employment route as a result of hunger can be a successful entrepreneur. Most people in the informal sector do it because they want to feed their families and not because they want to be entrepreneurs. Therefore, government should infuse these kinds of traders/ survivalist entrepreneurs as part of the social plan. After all, economics empirial studies have shown that economic growth partly results from a high consumption of national resources.

The emphasis from government on trade and business transformation policies should be the strengthening and support of small businesses in the formal sectors of the economy. My take thefore is that government should place emphasis on SME's and place the other M (Micro) in the social plan alongside social grants. This could be done in the form of subsidy or incentive to those who are going out of their comfort zone to survive instead of relying on grants which in the main results in entitlement mentality. Of course, elderly, disabled and other similar categries should be classified and exempt from such a plan.

Entrepreneurial development at formal level does have an impact on economic growth which has a ripple effect of job creation. This focus on formal sector small businesses would help to absorb the supposed informal traders into the main stream economy through labour-intensive activities by those already in the formal sector as a result of solid support , in every possible way, by government. One thing i am proud of is that South Africans are creative and have entrepreneurial spirit. It is the latter that we need to develop, encourage and embrace. Another biggest focus for government in terms of support should be innovation. South Africa is relatively a least country with annual patent fillings, let alone commercialisation thereof. Given the saturation of key industries on exports which are mainly dominated by mineral resources, exports of technological knowledge would be key in economic growth. This could also be a spinoff for new industries.

As an emerging entrepreneur and a servant at heart, i take solace on the renewed vigour by the government manifested in the development of econimic growth trajectory through Industrial Policy Action Plan, New Growth Path and the most recent National Development Plan. I hope the lessons learned in the past decade and a half will bear fruit for the next two decades.