What’s needed to take African countries like Sierra Leone from Third to First World in 25 years

Sierra Leone Telegraph: 14 July 2016

Poverty in Freetown, Sierra Leone.

Since the turn of this Century, the debate, aspiration and expectation of many in very poor African countries like Sierra Leone, is to become a middle income country by 2025.

With daily income per capita of about $1.50 and high illiteracy, most countries on the continent are struggling to uplift their population from poverty, without massive investment in education, electricity, water supply, good health care, labour skills development, and support for technology based industries.

Until the Ebola crisis in West Africa, Sierra Leone had achieved an average annual GDP growth of at least 7% in the last ten years, to a low of 2% today.

But Ebola has long left the shores of Sierra Leone, and the heavy lifting to economic success is now the biggest challenge facing the Koroma government and its successor – post the 2018 general elections.

Sierra Leone’s economy is almost exclusively dependent upon mining exports, with agriculture and foreign aid making up the difference between survival and national bankruptcy.

With unemployment at over 70%, average daily income at less than $1.25; adult mortality at 41 years, and literacy at less than 40%, the government of Sierra Leone has to do more than simply launching strategy documents every other month.

It must go beyond the political rhetoric of zero tolerance of rampant corruption and public sector attitudinal change. Governance and leadership in Sierra Leone needs complete transformation, not the reform agenda of the past ten years supported by the World Bank and IMF.

But can Sierra Leone become a first World country in the next twenty-five years, given where it is today? And what do successive governments need to do to achieve middle income status in the next nine years – a goal set in the year 2000 by the former SLPP government?

Writing for theconverasation.com,  Sandile Swana and  Lumkile Mundi are hopeful that many countries in African can achieve First World status in the next 25 years. But there is plenty of work to be done by African leaders. This is what they said.         

One of the most hotly debated topics in development economics is: what does it take to steer a poor country from Third World to First World status?

It is a debate of particular relevance in Africa, which is home to a large number of countries in the Third World category. It also has some of the fastest-growing economies in the world.

salone poverty1In recent years, economists have used the terms “developed countries” to denote First World and “emerging markets” to refer to Third World countries. We believe that the use of these terms camouflages the extent of underdevelopment and challenges faced by the poorest. The terms are also viewed as a means of excusing First World responsibility to provide material support and solidarity.

Third World countries are characterised by a big agrarian sector and a huge proportion of the population living in rural areas. They are also marked by low productivity, disease, high infant mortality, lack of potable water and poor infrastructure.

First World countries are highly urbanised, and citizens enjoy universal access to health, education and housing. They also exhibit high productivity, strong service sectors and freedom of movement because of infrastructure.

Within decades, many Asian countries made the transition from Third World status to First World status.

Some countries in Africa are well placed to make this transition. These include Ethiopia, Rwanda, Uganda and Kenya, Ghana, Côte d’Ivoire Gabon, Mozambique, Angola and South Africa.

china2We believe that these countries can emulate the “Asian miracle”, but only if governments take decisive steps to achieve certain outcomes. East Asia has a remarkable record of high and sustained economic growth. From 1965 to 1990 the 23 economies of East Asia grew faster than those of all other regions of the world. Most of this achievement is attributable to seemingly miraculous growth in the eight economies studied.

First, gross domestic product (GDP) per capita or the average household income must be improved. It is impossible to sustain important aspects of human development without this.

Second, state intervention and robust national leadership are crucial. The economic strategies of successful countries were influenced by leaders who were committed to rapid development. They had a focus on growing human capital. This in turn led to increased productivity, increased household incomes and an improvement in the general standard of living.

The Asian example

Lee Kwan Yew, the first premier of Singapore and largely considered the founding father of that nation, is arguably the one Asian leader who popularised the idea of moving from Third World to First World in one generation.

Time frames matter when attempting to understand how long it takes to make the transition. Examining the economic trajectory of some countries between 1960 and 2016 suggests that it can take about 25 years to turn a nation from Third World to First World.

Japan was the outright leader, but in time other Asian nations started leading in certain industries. Examples include Taiwan and South Korea. They had no mineral wealth. What they had, instead, were national systems of innovation and, critically, they invested in human capital.

They copied technologies from First World economies until they were on par and even overtook the First World countries. In many cases they started off equal or lower in GDP per capita when compared with a number of African countries.

For example, in 1957 Ghana and South Korea had about the same per capita GDP. South Korea had a national leadership focused on the development of state institutions that were focused on rapid, technology-intensive economic development. Ghana has no programmes of similar nature on record.

Taiwan’s economy underperformed under Japanese colonial rule between 1895 and 1945. In the 1950s the country was an agrarian economy with the same living standard as Congo. But by 2010 it had overtaken its former colonial master to become the number one producer of semi-conductors in the world.

The point is that a colonial past is no excuse for Africa’s failure so far to catch up, emulate and leapfrog.

Income growth

Success stories of the kind envisioned here have been controversially called miracles. Yet there is no magic.

Studies have shown that nations that made serious economic progress focused on growing the average income of their citizens. For example, Japan focused on this between 1950 and 1972 and doubled its GDP per capita.

Water povertyNineteen out of 23 of the poorest nations in the world are in Africa. Of the 54 African countries, about 19 are represented on the world’s poorest list.

Yet no African leader has pursued with single-minded determination the improvement of household incomes. Instead their focus has generally been on economic growth with trickle down being viewed as a panacea for higher GDP per capita.

Even in South Africa there is no set period for the poor in the black majority (90% of the population) to move into the middle class proper, with access to tertiary education, white goods and shelter, and annual household expenditure close to US$36,500.

Household incomes improve when the largest number of people get involved in technology-based productivity work. Even agriculture needs to be high-tech and include agro-processing. This is a path currently being followed by Ethiopia.

The role of the state

In Asia and Europe state intervention was seen as a key strategic tool to stimulate and guide development without impeding the private sector. States crowded in private capital in support of investment in infrastructure and human capital formation.

This represented an approach that can be described as state pragmatism rather than simply leaving matters to the markets, as neoliberals argue, or by imposing state control, as ideologues on the left have argued.

The Asian Tigers have been criticised for the lack of democracy, favouritism in allocation of resources, cronyism and protectionism. But there is unanimity that they have succeeded in taking the masses of their populations out of poverty, unemployment and inequality.

Another key area of focus among the Asian Tigers has been investment in their youth. But the youth need education to be academically and technically ready to explore the boundaries of knowledge and technology for their own benefit and that of their countries. Africa should exploit the youth dividend, its most important natural resource.

The Asian Tigers also all have a national innovation system that links government, well-funded research and development institutions such as the universities and industry. Taiwan boasts 21 research institutes, some covering the most advanced technologies like nano-technologies. Again, African nations do not have such institutions.

There are signs that some of these lessons have been taken to heart. Rwanda, for example, is doing very well by investing in information, technology and communication, and in its own people.

Ethiopia has invested in agrarian reform to subsidise industries through economic processing zones.

These efforts arguably will bear fruit in the transition to First World status.

Very few nations prosper without well-organised and strategically focused hard work and sacrifice. Africans need to learn to direct effort and resources with a long-term goal. Leadership is key.

About the authors

Sandile Swana  is a Lecturer at Wits Business School, University of the Witwatersrand.

Lumkile Mondi is a Senior Lecturer in Economics, University of the Witwatersrand.

3 Comments

  1. With regards to development in Africa, I believe we should lower the bar for Sierra Leone instead of expecting us to rise from a third to first world in 25 years. We should instead ask what will it take to reach the level of development as Rwanda that has experienced the same situation like us, and not only survived, but excelled within few years?

    After speaking to a USAID consultant who has been to 30 African countries, I was surprised when she mentioned Rwanda and Namibia as the best examples in Africa, and she based her conclusion on cleanliness and putting qualified officials in the right offices as in the case of Rwanda.

    Unless the president refrain from “putting square pegs into round holes”, we will never achieve any sustainable development .

  2. The authors did not go into the actual mechanics of development and just made general statements. The first step to development is to fight the clan mentality of voting for leadership based on tribe or religion.

    If the people want progress, they must put a focus on merit, qualification, experience and character when choosing their leaders. A government voted in on merit must then ensure that institutions are functional, so that justice, law and order can prevail.

    Institutions regulate our behaviours, and without them we may as well be animals. Institutions prevent the strong from preying on the weak and it ensures that everybody abide by the rules of the game. the eventual goal of strong institutions is to destroy Corruption and injustice.

    The next thing the state needs to do is to build an enabling environment for investment, by investing in electricity, education, health care, roads, bridges, telecommunications, water supply, railways, etc.

    Adequate power supply and good roads will reduce the cost of doing business, and increase the competitiveness of a nation. A factory in Sierra Leone has to run on diesel generator most of the year. But a factory in the US is more competitive, as it incurs less cost on energy as it is cheaply provided by the state.

    After developing these vital infrastructures, the state must seek to transition the economy from rural agriculture to industrial economies. this industrialization could be done with the help of foreign direct investments (like in Singapore and China), or the use of state backed monopolies, with the focus of being global multinationals (South Korea Samsung, Japan Sony Mitsubishi Toyota).

    State backed monopolies help in achieving high economic growth and employment generation (Dangote, Nigeria). These monopolies should be well regulated though, to prevent their excesses.

    if we were to follow the process of building companies from infant size to giant size, development would take at least 200 years.

    Our politics of Zulus vs Xhosas, Hausa vs Igbos, Temne vs Mende and Fula vs Mandingo has to chage, from competent vs incompetent or honest men vs bandits first.

  3. The Singapore Model, from third world to first as stated is the best of example for African Countries to follow. I studied in Malaysia and I happen to visit Singapore within the frame of my study.

    Singapore is a wonderful place. With little or no natural resource compared to her big neighbours, has emerged as the shining star of Asia and the largest financial center in Asia and the 3rd largest behind London and New York as of March 2016.

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