Knowledge Economy: Key to Africa’s Development

Published on 24th April 2007

The growth of any country in a global economy has to be knowledge based. The gross domestic product (GDP) of the United States (whose economy grows at an annual rate of 4.4%) was $11.7 trillion in 2005 while China’s (whose economic growth averages 9.1%) was $1.7 trillion. At this rate, China will surpass the American economy in 2049 and both GDPs will be close to $78 trillion.  While this appears to make sense, comparing the two GDPs doesn’t do justice to what is happening in China. While China currently has $1.7 trillion, its purchasing power actually buys $7.1 trillion worth of goods while the American GDP purchases $11.6 trillion worth of goods. In this comparison, China will surpass the US economy in 2016!  

 

How has China attained high growth and positioned itself as an economic superpower? How can African countries tap the principles that have enabled the Chinese economy to become a giant? A country can either grow by increasing its labor force or increasing the productivity of its labor force. China works hard to maintain its current labor force while improving its productivity. On the contrary, Africa’s abundant labor is grossly underutilized.

 

Despite significant improvement in overall gross domestic product (GDP), a UN report states, “poverty has been unresponsive to economic growth…Underlying this trend is the fact that the majority of people (in Africa) have no jobs or secure sources of income.” Four challenges facing Africa include: achieving structural transformation to break away from the under-utilization of rural labor; addressing widespread youth unemployment; harnessing globalization to create decent jobs; and creating an enabling environment for accelerated expansion of private sector job creation through increased investments. The report argues that while macroeconomic performance has improved in Africa since the 1990s, there seems to be little impact on unemployment.

 

To create jobs, African economies should be transformed from low-productivity traditional agriculture to labor-intensive high value agriculture and agro-processing - and to the growing industrial and services sectors, taking advantage of globalization opportunities, the report argues. The distributions of African workers according to industries are: agriculture with 60%, manufacturing (15%), and the remaining 25% in investments and banking, mining and drilling, services, transportation and technology.

 

The knowledge economy  

 

In the United States, the most productive sector of the economy is Silicon Valley, the world’s capital of the knowledge economy. In the US, 10% of the economy is transformation (where raw materials are converted into processed goods) while a similar percentage is transactional (such as bank-tellers, fast-food servers). These are limited by time, equipment, machinery and capital. Eighty per cent of the economy is knowledge based. This economy doesn’t have any restrictions. All one needs are knowledgeable workers and their ideas. Instead of punching the clock at 8 am and leaving at 5 pm, they work whenever they feel like. Provide a computer, paper, pen, mobile phones or a desk and their creativity and you have a knowledge worker contributing to innovation and change.  

 

In Silicon Valley, productivity increases by 16% per annum as the producers of computer hardware and software reinvent themselves every 18 months. Using ’Moores Law, the value of Silicon Valley doubles every 54 months! With globalization and outsourcing, African economies can develop workers that compete on a global scale for business opportunities while utilizing available cheap labor and an educated workforce currently languishing in unemployment or underemployment.   

 

The way forward  

 

African governments ought to revitalize their economies from the negative performance of the past decades resulting from socialism and government interference in business. Better agricultural practices integrating Africa’s cheap labor and methods will provide a starting point in getting our highest number of workers engaged in a major step towards self sufficiency.   

 

Open communication between nations and regions will also foster better understanding of already available technologies that would work in most areas. Instead of hoarding information and technology, governments need to facilitate better communication and opening of markets so that African economies can benefit from already invented methods instead of re-inventing the wheel. This will spur entrepreneurship and provide jobs which eventually lead to economic growth.  

 

African governments should act as facilitators of economic growth instead of running the show. Most government parastatals never make any money. They are sources of employment for inefficient civil servants that are managed by ineffective leaders who don’t understand the meaning of productivity and profits. Governments should sell these organizations, get rid of the practice of price controls and let market forces determine the value of products.  

 

The knowledge economy has already begun in Africa. Web developers in South Africa are finding ways to build web applications that either provide solutions for the country and  Africa. In Kenya, mobile programmers are coming up with better ways to utilize the mobile platform from checking farm produce prices to mobile banking. Timbuktu and Afrigadget offer information on some innovative businesses looking for alternative ways of doing things and tapping into the knowledge economy.   

 

Call centers are part of a vibrant South African market that competes with other centers in North Africa. Kenya, Ghana and some countries in Francophone Africa have entered the foray with call centers employing young, energetic and educated workers who can either speak good English or French. As multinational corporations and those seeking cheaper outsourcing destinations look at Africa, we will be able to grow this field. It is not until Africa develops products such as software on a global that we will be able to maintain the high growth rate that Silicon Valley or India can achieve. 

 

So what is the biggest need Africa has in order to tap into the knowledge economy?

 

Africa needs to address: access to affordable computers, solid training for  young programmers who need to work on real projects in order to gain valuable experience and skills, fostering entrepreneurship and allowing good ideas to become successful. As Justin Hartman, a web developer for Afrigator said in an interview on WhiteAfrican.com,

 

“Our biggest challenge is resources. By that, I am referring to the accessibility of the Internet to Africa. We want to reach the masses, but as with SA we will probably only hit the elite few who can afford broadband...can we change that with a future strategy? Mobile is a key solution here I think.” 

 

By Joshua Wanyama

African Path

 

See http://www.africanpath.com/p_blogEntry.cfm?blogEntryID=629


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