How African Economic Policies Can Turn Domestic Resources, Growing Markets, and Entrepreneurial Ambition into Lasting Prosperity
An economy becomes productive when it enables people and businesses to do more. A farmer needs proper ways to reach his clients. A businessperson needs affordable electricity and a stable policy environment. An aspiring entrepreneur needs capital, without wasting a lot of time going through the red tape. This is how real life shows whether an economic policy is working on the ground.
On the entire African continent, the governments have to create environments where businesses could develop, workers acquire necessary skills, and industries can compete in regional and global markets. The economies of Africa are varied, so different economic policies are needed, but there are certain priorities for them all – production inside the countries, effective governance, investments and participation in the economy.
Definite African Economic Policies will allow connecting these priorities by regarding economic development as a process.
Make Local Production a National Economic Priority
There is agriculture, minerals, energy, and other resources within economies. But export of such resources without industry development will result in the limitations of the range of economic opportunities available for local business and workforce.
Greater domestic value addition can be enabled through government development of processing facilities, upgrading industrial infrastructure, and supporting small suppliers in order to meet the needs of big manufacturing firms. In case of agricultural zones, economic growth will take place if there is the possibility to process the products on site, package, maintain machinery, and distribute the product through business networks.
This kind of economic opportunities does not only include financial aspects. Business should have stable access to energy, infrastructure, industrial sites, and technical expertise. The government intervention should address the problems that prevent viable businesses from expanding.
Such kind of policy could be implemented through African Economic Policies that would offer clear incentives and performance criteria and develop industries capable of employing people in sustainable way. Governments should measure success of their incentives based on productivity, skills of the workforce, involvement of local suppliers, and viability of the business.
Build a Business Environment That Rewards Initiative
Small and medium-sized companies have significant potential in terms of providing employment and innovation; however, many of them experience various challenges in terms of becoming more formalized and reaching beyond their own local community. Difficult licensing procedure, unclear fees, slow payments, and unpredictable enforcement can lead to spending business funds on something else than on its development.
The government can solve this problem through simplification of the registration procedure, bringing together administrative functions, making clear the compliance standards and providing information about the procedures online. At the same time, the system should be flexible enough in order to accommodate those businesses, that do not have good access to technology and the Internet.
Consistency is equally important as simplicity of the regulation. An entrepreneur needs to know his/her responsibilities before putting money in premises, equipment, and personnel. Changes in the policies even if each one of them seems reasonable, can damage confidence.
The goal of African Economic Policies should be to create such an environment for business, in which people could make plans.
Connect Education With the Skills Employers Need
The economy will benefit when workers acquire the right skills through training. With increased manufacturing, there is need for technicians and production managers. Agriculture has become complex in terms of irrigation, storage, logistics and quality control and thus the need for people with such skills in this industry. The digital industry is also in need of people with ability to produce and use technology.
This can be achieved when the training institutions collaborate with employers to know the skills that are required. Vocational training, apprenticeships, internships and technical training courses will make students graduate into gainful employment.
Apart from preparing young people to join the labor force, there is need for adult education. Workers need training when new machinery is introduced or changes are made in operations of various industries.
This becomes even more important when the efforts are geared towards creating employment opportunities. Evaluation of the training programs will take into account the results of the employment.
Through the African Economic Policy, education and employment policies can complement each other. This will make industries get capable workers while improving chances of employment. The government will also derive higher economic returns from investing in education.
Improve Access to Finance Without Encouraging Unsustainable Debt
A business entity can possess a viable product as well as a credible client base but still be unable to secure funds necessary to purchase equipment, stock up on inventories or expand into a new market. Traditional financing constraints can make it hard for a young business and firms without significant collateral to gain access to funds.
Financial institutions and policymakers can remedy the situation by ensuring appropriate credit information, financing mechanisms, guarantees and banking services that suit the industry. Repayment of agricultural enterprise loans, for example, can be adjusted according to seasonality of revenues.
Furthermore, fiscal prudence on part of the government is crucial. Borrowing can facilitate infrastructure development and investments but becomes problematic where the returns are low or where the borrowing results in commitments that revenues cannot meet.
Proper budgeting entails proper evaluation of projects, procurement transparency, realistic revenue projections and proper expenditure evaluation. Public funds should not only be used to address urgent priorities but also to increase the economy’s capability.
African Economic Policies have thus to be bold and affordable at the same time. The objective of investing public money is to increase future productive capabilities and retain the government’s capacity to meet its needs.
Turn Regional Trade Into Commercial Opportunity
Selling goods internationally is not an easy task for many businesses due to differences in customs practices, standards of the products, documentations, payment facilities and transportations that might raise costs and affect delivery times.
Regional cooperation can help in solving these problems. Government could improve border administration, standards coordination, transportations, and ease the process of trade requirements. These actions can provide businesses with a possibility of reaching larger markets without setting up costly facilities in every market.
Regional trade is motivating companies to raise their product quality and effectiveness. The access to a wider market will allow making investments into more advanced technologies, distribution and specialized production. But these advantages cannot be realized without working logistics and the implementation of it.
African Economic Policies can be considered successful only in the case when businesses are able to operate easily with their neighboring markets. Regionalization makes sense economically when companies can use it for getting customers, diversifying suppliers, creating jobs and developing products for wider demand.
Measure Progress Through Everyday Economic Outcomes
The performance of any government in terms of economics cannot be measured solely on the basis of growth. Growth may be seen alongside a lack of jobs, poor public service delivery, or uneven distribution of business opportunities. Governments require measures which help determine whether the economic process is making things better or building up productive capacities.
Examples of such measures include the ease of setting up business, electricity reliability, cost of transporting goods, availability of finance to small firms, labour productivity, and firm survival rates. Quality of employment and buying power of citizens are other useful examples showing the impact of the economic processes on communities.
All these measures should be made easily understandable through public disclosure. Where governments disclose their credible performance measures, businesses will take better decisions, citizens will be able to judge their progress, and governments will know which programs are not effective without wasting more money.
In the end, African Economic Policies will offer real value where they contribute to increased productivity, capacity building for business, and opportunities for people. The future of Africa’s economy will not rest on any one particular reform or sector. Instead, it will rely upon consistent decision-making that ties local enterprise, effective institutions, responsible finance, and regional collaboration together into an integrated plan for development.
At its core, it will be about creating economies where assets are put to greater use, businesses are able to move past their initial stage, and economic growth becomes evident through improved conditions at work and in incomes.
