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Market Expansion in Africa Will Require Human Capital

Posted By Guy Pfeffermann, Tuesday, May 24, 2011
Updated: Thursday, January 31, 2013
Guy Pfeffermann

Last week the FT published an article, Africa: Ripe for reappraisal, about new perceptions about Africa and some of the underlying realities. It is one of the best pieces on the subject that I have read in some time. It can be summarized as follows: (a) there is unprecedented progress in much of Sub-Saharan Africa; (b) this progress is being amplified in newly upbeat perceptions; (c) reality is extraordinarily complex, and Africa very heterogeneous; economic and social progress is still uneven and from a low starting point, but the change in perceptions - from glass half-empty to glass half-full, is a welcome change.

Click here to read the full article.

The article mentions the most salient changes. I would place the cell phone revolution first and foremost among them. It has brought tens of millions out of isolation within ten years, a change that took many centuries in Western Europe. The natural resources boom is a positive development, although its impact on living standards depends on how the earnings are being used. Furthermore, as in Latin America, the boom reinforces dependence on raw materials exports and, by pushing up exchange rates, discourages the production of traded goods, notably industrial exports. Massive Chinese infrastructure projects are hugely welcome, as Western aid had neglected them for decades, to the detriment of economic development. Substantial but fluctuating inflows of foreign private capital are surely a good thing. Nothing new about massive capital flight, especially out of oil-producing countries.

What I miss in the article is any reference to human capital. Yes, the market is expanding, yes, a small middle-class is growing, but will the benefits of growth spread unless something radical can be done to repair dysfunctional education systems and vastly improve health systems ? A recent UNESCO report shows that at least half the kids that go through primary school can't read, write or count. Even in South Africa, primary and secondary schools have deteriorated to the point where universities cannot find enough students. Higher education has been neglected for decades, largely because funding them is not part of the Millennium Development Goals that govern much of foreign assistance. Economic growth is outstripping Africa's capacity to build human capital. This is clear for example when it comes to management skills, which are essential to economic and social progress.

In Africa, demand for business education is rising exponentially. Companies, NGOs and governments are desperately looking for local managerial talent. Yet there are only about 50 schools in all of Africa that produce business "problem-solving" graduates whom employers would hire. India and China, with only slightly larger populations, each have more than a thousand such schools. What is called for is not marginal change but a veritable "Marshall Plan" for management education in Africa.

In conclusion, African growth may well peter out because human capacity formation is hugely neglected.



Guy Pfeffermann is the founder and CEO of the Global Business School Network.

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