This conversation resulted in the publication of a series of my thoughts which are featured on wwwdanolusresearch.blogspot.com.This conversation was a debate examining the best model for entreprenual development for Africa.We will continue the discussion .Give us your views .
On 21/8/10 15:40, "Lovemore Mhindu" <trackers@hotmail.co.za> wrote:
Dear Bob
I hope you have time to read this .I wrote after I saw the article in the Leadership magazine .Can I also engage in the discussions???
I have been researching how China could have achieved the economic growth they now enjoy and think I'm closer to the truth.
Michael Elliot (Cape Town based journalist) wrote an article in the Times magazine of July 12 2010(page 31).He says China has achieved a unbeatable record in women education.We know that China's huge workforce is dominated by women and considering that literacy in China doesn't need to be the ability to read and write in English .
This brings me to the conclusion that China's entire population or just about nearly all of China is literate.This makes a big difference when the country's industries need skilled and semi- skilled labour .It becomes fairly easy for their employer to train them for specific jobs .Lets add their willingness to work long hours and under difficult conditons -the result is diverse and highly productive workforce which has no equal on this planet.
China's major strength lies in its workforce which is available on the Cheap ,in large numbers and can read and write (at least in Chinese) .In my understanding ,they have one of the four factors of production(labour) available at a huge discount compared to their competitors(the west &all of us) .
Africa also has a factor of production (land)that is available in large quantities,has lots of locked - up value and can be available at reasonable cost (barring political interference) .
The other reason for China's growth has been has been State-led development .I beg to differ- that such a model could be ideal for Africa ,given our governments inability to implement plans with integrity.China's state-led economic growth means the Chinese banks have been at the forefront of dispensing loans for infratructural development .The weakness of this set-up is that Credit - worthiness procedures are dropped in favour of patriotism which is why fears of China's economy overheating are widespread among the world's top thinkers. Thanks to China's huge foreign currency reserves ,China's able to overlook bad debts and clean them up using these reserves .
I feel Private sector led Economic growth is a superior model for Africa provided youth and women (their numbers are larger compared to men) are trained in Leadership and entreprenuership skills .In this way our natural resources(which is all we can offer the world ) can be converted into value for Africa and by concentrating on the younger generation we give the intiative a longer lease of life.
I look at the West,America in particular, shows that the Recession is far from over.I feel that the American government's printing of money to bail out banks (call it stimulus or whatever)does not address the underlying problem .The borrowers need to have the ability to create value (and translate it into cash) .If this is absent then it means the Feds are pumping money into a system that isn't paying back (revolving fund ) ,hence the need for another stimulus package .It could be harmful to US economy as a whole if the mortgage debtors are led to believe that whenever they are unable to pay their debts -the Feds can always bail them out.This goes against the Captalist model (To create wealth and redistribute it )
This appears to be Government influenced economy development which I think can never and will never work especially in a Market Economy .I agree that governments should play a role in the economy (regulate and enforce the laws & regulations which safeguard economic health)
Is it possible to train our African Entreprenuers to be creators of wealth and re-distributors of wealth (with all integrity) ??
Is it possible to convince African Govts that State Led Economic growth is inferior to Private Sector led growth (where genuine entrprenuers are created from)?
Let me hear your views
Bobby's response....
China
The longer I live the more sure I become that there is no magic formula for building a good society: not east or west, north or south. In economic terms wealth is created when individuals combine resources and create more. The evidence of the first three centuries of “industrial” society is that this happens better in an economic system when resources are privately owned, and price and production levels are determined by market exchange. This is precisely what China started doing in the early 1980’s (with 1979 being the key policy shift year). Then starting from a VERY low base they have achieved amazing levels of % growth since then. We should never use % without also using the base. China’s wealth per capita is still on third below that of South Africa, and less than 10% of that of rich countries.
Africa
Wealth will be created by individuals combining resources (labour, knowledge , technology and money) to create more. You do this in your job at Karkloof. Township entrepreneurs do it. Companies big and small do it WHEN they are efficient (by no means always the case). I have not seen a single case of governments creating wealth in an economic sense. They are the referees in the soccer game. They mark our the field, control the clock and write and apply the rules. That is a big role. When done well this facilitates wealth creation. When done badly it blocks wealth creation and often destroys existing wealth. Africans must look to themselves to create wealth and look to their governments to create the public goods of safety, good regulation, basic education and basic health.
Lovemore writes...
I have gotten over the shock of the retrenchment exercise at Karkloof Spa .I survived .Based on the emotions of the time ,I apologise for the delay in my response and fear I might have been out of line in my previous email .
As I watched others pack and leave ,the event prompted to look deep within myself in light of your statement in the email below -I quote -"Africans must look to themselves to create wealth" . I found this inspiring.
In this situation ,others thought Owner to be the villian but the reality of the matter lies in than most us in Africans have become dependent on the Employer for our welfare .And when the Employer does not meet our expectations we look to Government to address our plight .I am equally guilty of this mindset ( because I am employed).I find this mentality very "Industrial " Age.
You also mentioned in the mail below that -"Wealth is created when individuals combine resources and create more". Allow me to rephrase this " We create wealth when we build synergies".
Unfortunately for us, the "Industrial Revolution Era" has passed and we are now in the Information Age but we remain rooted firmly in the former way of thinking.(Some Governments are firmly committed to pushing back their populace to the Agrarian Age).We now live in the Information age where it is a lot easier to create wealth through synergies -you no longer need to be born of Royalty to be wealthy. This is a time where college students become Billionaires while in their dormitory rooms . High School students are the new Millionaires who are creating wealth by providing computer based solutions for our everyday problems .It appears only the First world has been able to harness the potential of the Information Age while most of Africa is still in the Industrial Age or if not even worse - in the Agrarian Age .
In Africa we have created so any artificial dermacations that separate us in many different ways . This makes it hard for us to synergise or combine our unique diversity of skills and abilities. I hope to live long enough to see the emergence of a Financial hub similar to Silicon Valley -on the African continent.Where an African Innovator/entreprenuer can present his idea and Financiers fall over themselves in a scramble to be the first to combine with him regardless of his nationality,ethnicity or race.
I respect the Township entrepernuer but he is in it because he has no other option .He has a family that must eat and sleep under a roof at the end of everyday .He cannot find a job,has no money for college education and being an entreprenuer is his last option ( actually the best option )
He is an entreprenuer because that is ALL he can be.
Therefore, we MUST make it compulsory for our education system to provide innovation /entreprenual training at the most basic level.(Japan has been doing this for some time and are well ahead of us as a result )
Given the way things are turning out - it will equip our younger generation with the necessary skill to survive the tough times ahead .
