Business
Getting Rich the Hard Way
Thinking at the World Bank about supporting local companies is evolving. Its vice-president for Africa, Makhtar Diop, told The Africa Report: “This is a taboo subject, I know, but I would like to look at how to take the trader in Cocody, in Abidjan, and help him move towards manufacturing, investing in the productive sector. How can we help him transition?”
From Jags to riches
There are other ways for governments to boost entrepreneurs, such as requiring local content in government contract tenders – not unlike the Buy American Act of 1933. And though many laughed at Indian officials forced to drive around in the dowdy first iteration of locally made Tata cars, Tata Motors now owns Jaguar and Land Rover, two former flowers of the UK car industry.
“Anambra State government has ordered 1,000 vehicles,” says Chukwuma. “And the government has announced that local manufacturers will be considered first choice for procurement deals.” Nigeria seems to have a taste for industrial policy, which is ironic given that coordinating minister of the economy Ngozi Okonjo-Iweala used to be second-in-command at the World Bank.
At the launch of Nigeria’s Automotive Industrial Policy Development Plan in October 2013, trade and industry minister Segun Aganga, himself a former Goldman Sachs employee, said: “Recognising the strategic effects of the automotive industry in industrialisation, emerging economies like Brazil, China, Malaysia, India, Iran, Indonesia, Thailand and South Africa took deliberate steps to develop their automotive industry between the1960s and1980s.”
So far, so rosy? Let a thousand factories bloom across the continent? It is very easy, particularly for those who naturally swing to the left, to get high minded about US president Ronald Reagan and UK prime minister Margaret Thatcher’s ideological crusades.
But beyond the Cold War, there was a reason why there was such a strong pro-market wave in the 1980s. “We need to learn the lessons of proactive governments in the 1960s and 1970s in Africa,” says Justin Yifu Lin, a former chief economist at the World Bank.
“They introduced all kinds of distortions and wanted to build up large-scale industry in poor agrarian economies. These firms turned out to be not viable,” he explains. Some of Ghana’s ill-fated companies spring to mind. And Nigeria created an auto sector industrial policy in 1971 to assemble knock-down car kits.
