Branson's 'Plan B': Better business in Africa

Does capitalism in Africa have a 'Plan B?' -- a version more promising yet socially-environmentally palatable and politically possible?

Sir Richard Branson last week launched his 'Plan B' initiative -- as The Economist describes it, a small group of business leaders who will campaign for reforms to make capitalism more socially responsible and more inclined towards addressing long-term issues such as climate change.

Much of what is happening in contemporary sub-Saharan Africa appears to involve a search for suitable models: an overarching idea about what development should look like and the relative roles of the public and private sector -- along with all sorts of hybrid initiatives -- in delivering both individual prosperity and public goods.

This search for a 'meta-narrative' to guide economic growth may be nothing new, but nor is there yet a post-'Washington consensus' consensus. African policymakers' perceptions of China's rise and developed economies' woes are the obvious backdrop for these debates, which are largely dumb to all the lessons and literature on the limits of transmitting or transplanting one model of governance or development to another setting.

This search -- and the appeal across Africa of the 'Beijing consensus' / state capitalism -- makes especially relevant, in this decade, the question of what model of capitalism (or aspects of it) will prove most persuasive or pervasive in various African settings, and what indicators will matter in judging performance -- the quality of growth, including its capacity to address inequality.

Will African policymakers find ways to enable the private sector to do well while doing some good, or is such an enquiry naive in the context of heirarchical market economies that may be neither liberal nor communitarian, and where politics so often matters far more than policy, and public/private distinctions are less easily discerned? What was the Plan A in Africa -- has it demonstrably failed, requiring a Plan B, or was there no African setting that exhibited type-A capitalism anyway? Can African economies avoid the angst and analysis and just leapfrog straight to Plan B ('nice' capitalism) or are current patterns structurally entrenched and impervious to reform?

One reaction to the Branson idea labelled it 'fascist' for suggesting that modifications to unrestrained free enterprise were appropriate. Yet the (anti-fascist) democratic impulse is what drives many of the voices calling for Africa's development to be greener, friendlier, more inclusive. It involves a constituency that mainly looks to the state to ensure that this happens, even while most African entrepreneurs (from street hawker to super-tycoon) find the state, when not being an irritant, largely absent or irrelevant. African capitals have not experienced direct equivalents to the 'Occupy Wall Street' phenomenon -- but governments are in little doubt of the mass expectations to deliver electricity, jobs, services. How private enterprise behaves or belongs in such scenarios -- scapegoat or strong deliverer -- is something governments are working through. This is hardly the end of history.

I see this search for models in many areas I work on: east African governments with new-found offshore gas wealth wondering how to develop these, and manage the resulting revenues, more like Norway has than Nigeria -- more East Timor (Timor Leste) than Equatorial Guinea. More responsible policymakers in these settings are asking what an appropriate, viable model for natural resource wealth management will look like. To the west, Nigeria's current presidency is trying to sustain momentum on ambitious policy reforms that go to the heart of broader notions of the state's role in major sectors of the economy. South Africa's ANC, channeling (as it sees it) Brazil and others, is rather painfully exploring what role private finance and business plays in its vision of the 'developmental state'.

During a rail journey to London on Friday I chatted with a schoolgirl whose Economics essay assignment asked her to write on whether the government had a role in addressing poverty or whether this ought to be left to market forces. Simplistic stuff, you might say -- except that its the gist of this year's US presidential debate, and not long after the train journey I sat in a meeting with a major development finance outfit. There we discussed fairly 'back to basics' things: if we are to devise a compelling (accurate-yet-aspirational) agenda for Africa-focussed developmental funding with a commercial bottom line, what does all the current fashion for promoting 'public-private partnerships' as the engines of growth and poverty-reduction actually mean? Where exactly should the state's role end and that of commercial actors begin, even if they share the same broad social development agenda?

The more one looks, it seems to me, the more Tony Blair's remark earlier this year -- that Africa is in a 'post-ideological era' where Cold War-style debates are long dead -- makes no sense. It is not just that 'the state is back' (in many settings is never went away, even if it never matured). It is that deep political imperatives -- especially the need to create jobs for the continent's youthful, restless populations -- are challenging African leaderships to devise models that appease both those holding scarce capital, and local forces imbued with a new assertiveness about the local value-addition that investment must bring to be seen as legitimate.

Perhaps above all -- and even if one's only interest is essentially a conservative one, continuity not sudden change -- a Plan B for Africa would need to focus on social inequality. That is, increasing inequality gaps in many African settings from Lagos to Luanda mean that any Plan B must, to be sustainable, include ways to ensure new-look capitalism's benefits are not limited (wait for the mixed metaphor) to A-listers.

Jo

- The article from The Economist is here.
- I've discussed these themes in other posts, see those labelled 'private sector', in particular the one critical of Blair's 'end of history' comment, here.