Africa's low-hanging fruits: the right intervention, at the right time, and right place.

Author:Lin, Justin Yifu

At the onset of its miraculous rise in 1979, China had been trapped in poverty for centuries and was poorer than most sub-Saharan African countries. Thanks to the right strategies for transformation, China achieved an average annual growth rate of 9.8 per cent over the 35-year period from 1978 to 2013. Its per capita income reached US$6,800 in 2013, more than four times the average in sub-Saharan countries. The proportion of China's population living below the international poverty line of US$1.25 a day declined from 84 per cent in 1981, to 11.9 per cent in 2009 (World Bank data).

Is it possible for low-income African countries to achieve the same transformation as China? Our answer is definitely 'yes'. As long as African countries do not wait but start immediately to put the right strategies in place in order to grasp 'low-hanging fruits'.

China adopted a pragmatic, gradual, dual-track approach in its dramatic transformation. The initial opening up and liberalization met with many inherent hurdles: The business environment was poor, [1] the infrastructure was very bad, and the investment environment was harsh. [2] Advice based on the Washington Consensus was to improve everything for the whole nation simultaneously, without favouring specific sectors and regions. Instead the government mobilized its limited resources and implementation capability to build up special economic zones and industrial parks. Within the zones and parks the infrastructure bottlenecks were relieved, and business environments were made very competitive. Although labour costs were low, China lacked the knowledge about how to turn that particular advantage to produce labour-intensive goods of acceptable quality for export. To overcome these difficulties the government at all levels and regions proactively approached prospective foreign investors and incentivized them to make investments in the special economic zones and industrial parks. With that approach China developed labour-intensive light-manufacturing and quickly became the world's factory.

With a similar gradual, dual-track approach, a few other socialist economies--such as Vietnam, Cambodia, and Laos--were able to achieve outstanding growth performances under very poor infrastructure and business environments. The same approach also made Mauritius a development success in Africa since the early 1970s.

African countries can have the same growth miracle if they can grab the low-hanging fruit by putting the...

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