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Growth without resilience is but the ruin of the economy

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By building resilience into their economies, countries will experience growth and accelerate their move towards double-digit growth.. Photo: Alice Kayibanda/UNDP Rwanda

The success of emergence plans is dependent on a new social contract and the full commitment of citizens. 

Many African countries have engaged in medium or long-term emergence programmes. For the Second International Conference on the Emergence of Africa (ICEA) in Abidjan, we focused specifically on a sample of 13 countries, to explore the issue of emergence more deeply. This sample was fairly representative of the economic and geographical situation in Africa.

In studying all 13 sample countries, what struck me most was the typology of emergence paths. The first path is representative of countries such as Rwanda and Côte d’Ivoire, which have experienced significant shocks due to war or political instability and have seen their economic growth fall to its lowest level, but have then resumed rapid progress towards high growth. Behind this rapid recovery is the fact that these countries still had surplus production capacity that had not been destroyed, and they had the intelligence to develop these “excess capacities” to restart growth. They also invested in increasing their productivity and in building the resilience of their institutions.

Countries such as Senegal, Gabon and Kenya took a second path towards emergence, focusing on intensifying structural reforms until they reach a tipping point. This triggered a process of almost self-sustained endogenous growth. Senegal had growth rates of around 3 percent in 2011 and 2012, whereas now it approaches 7 percent.

A third type comprises countries that have been on this path for longer. These are countries such as Cabo Verde, Mauritius and subsequently Ethiopia, which essentially activate engines of growth in a 10 to 15-year cycle.

The crosscutting lesson is the presence in all these trajectories of leadership and vision. In my opinion, this is the most fundamental element. But there are a number of limitations.

Often, the vision is defined by governments or political parties, not necessarily with the commitment of other political parties. To ensure long-term stability, it is essential to involve other political actors in developing and implementing the vision. 

Another limitation is whether the vision is reflected in a social contract, meaning commitment by the population. Governance does not mean only economic and political governance. Social governance is very important. All three dimensions of governance are critical in embarking on emergence paths and in making these paths sustainable. Because, after all, development is a matter of mindset and culture.

Growth alone is not enough: it needs to be supported by structural transformation, and to trickle down to the population level. In essence, to achieve inclusive development, growth needs to reach all sections of society and all territorial areas.

When we examine economic growth in Africa during the ascending period of 2000–2015, we can identify three factors. First and foremost, good economic and political governance was determining. The second factor was the increasing power of the middle class, which had a Keynesian effect on demand. The third factor was the primary commodity boom.

There are also three scenarios of growth beyond 2015. Some countries that are mostly reliant on primary commodities, such as Angola, Gabon, Equatorial Guinea and Nigeria, are currently falling below the 5 percent rate, lowering average growth in Africa. A second group of countries are continuing in the 5 percent trend. Then there are countries, in particular the 13 emerging countries we assessed, that have risen above the trend. Côte d’Ivoire has 9 percent growth and is tending towards 10 percent; Senegal is at 6 percent.

It must therefore be put into perspective, remembering firstly that Africa is not a single entity. There are many countries in Africa, each following different paths. The lesson we want to impart now is to follow the top performers. They are at the top essentially because they have built resilience into their economies.

There is an enduring quote from Rabelais: “Science without conscience is but the ruin of the soul.” I would paraphrase this by saying, “growth without resilience is but the ruin of the economy”. By building resilience into our economies, as countries such as Senegal and Côte d’Ivoire have done, we can move towards double-digit growth.

 

This post is based on an interview with Financial Afrik.

 

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