Creating the most suitable environment for businesses to thrive in is key to improving all sectors of developing nations.
The most populous regions of the African continent have succeeded in ensuring physical security and stability. This in turn has led to increases in economic activity across various industries. As many of these highly populated regions project stability to continue, governments and economic organizations have an immense responsibility to foster an environment in which the private sector can further emerge and develop. In doing so the benefits provide an avenue for the stimulated growth of these nations by contributing physical and non-physical infrastructure as well as unemployment. While the obstacles that are currently impeding economic progress are real and often delicate, policymakers and intergovernmental organizations must continue to persist in creating a blueprint for their respective nations’ development.
Additionally, the continued rise in educated persons within these stable regions means that the job market is increasingly more composed of qualified workers seeking employment. It is important for these nations to make the accommodations necessary to take advantage of the talent they produce.
A swift snapshot of the landscape in the most active regions
Ghana
Among the 50 nations on the African continent, Ghana is well known for the stability it has maintained throughout the decades. While the nation’s development in its earlier years was not rapid, the discovery of oil and gas played an immense role in Ghana’s recent economic growth which has been helped by foreign investment. This has resulted in steady and potent economic growth within the last decade. The World Bank measured an average annual GDP growth rate of approximately 6.3% between 2010 and 2019. Moreover, Ghana will be able to exploit the projected Economic growth in West Africa specifically as incremental growth is expected to be made in 2023 and continue into 2024.
Ghana’s ease of doing business
Ethiopia
Ethiopia is currently Africa’s fastest-growing economy with a measured 10% rate of annual GDP growth rate between 2005 and 2019. The Ethiopian government has made significant efforts to modernize and improve the country’s infrastructure. A successful privatization campaign resulted in a momentous rise in foreign direct investment, particularly from China. As the government continues to invest in infrastructure, its plan is to shift away from its reliance on agriculture and create possibilities for Ethiopian manufacturing.
Ethiopian FDI per TradingEconomics | National Bank of Ethiopia
Rwanda
Rwanda is a country undergoing a tremendous transformation and has deservedly earned the reputation for being one of Africa’s most ambitious nations despite only being the size of Massachusetts. In recent years Rwanda has invested heavily in technology and digital infrastructure with the goal of becoming an important tech center in the continent. Key sectors of interest in this plan have been financial technology and e-governance. Rwanda is currently approaching the final year of its National Strategy For Transformation (NTS1) through which it hopes to create an environment for the country to become a middle-income nation by the year 2035.
Rate of Industrial production in Rwanda
Policy and Privatization
A common characteristic between the aforementioned economies and others like it is the push for privatization and foreign direct investment in underdeveloped industries that have known potential. When executed effectively, privatization can be a catalyst for growth and development in different sectors of an economy. Competition is needed in order for certain industries and sectors to grow and advance, if an industry is underperforming and yet run dominated by a monopoly, there is little to no room for any significant transformation.
The Nigerian telecommunications sector thirty years ago
Up until the late 1990s, the Nigerian Telecom industry was overshadowed by Nigerian Telecommunications Limited (NITEL), a state-run company. Prior to the industry’s privatization, telecom services were poor in quality, costly for consumers, and had very limited networks. During this time, very little was done to effectuate long-term transformative changes for the industry or for consumers. Recognizing the issue, the Nigerian government launched a privatization campaign to relieve the industry and in the process create an environment for competition, attract outside investment, and broaden service provisions and network capabilities.
The privatization program was successful in several aspects. It firstly created a competitive landscape which in turn led to newly formed companies lowering their prices to compete for customers. Furthermore, the arrival of multinationals like Airtel and MTN accompanied by the ascension of Glo brought in investment which subsequently led to improved service for consumers nationwide. This in turn meant that newer technologies were being developed and implemented that would contribute to the sector’s overall transformation.
Today, the Nigerian telecommunications sector is an important part of the country’s bustling economy. In addition to creating jobs, the success of Nigerian telecom has additionally contributed to the growth of other sectors such as e-commerce, banking, and the digitization of several industries.
Keys to the future
The key to setting the most effective economic policy for developing nations is to first compartmentalize each sector to determine the best possible strategy. Once a scope has been set, the direct and indirect obstacles must be defined in order to formulate a strategy that can meet long-term and short-term goals. Above all else, governments need to ensure ease of business for the investors they are trying to attract. In 2019, Rwanda was ranked 38th on a list of countries with ease of doing business (based on friendly regulations) which positively correlates with the recent progress it has made resulting from its NST1 program.
Meji is certainly not the first to see the potential for growth on the African continent, however, it is committed to examining and studying the most effective ways developing nations can wrestle their ways to success.