Facts Task One

“Africa as a continent has experienced huge development during the past century, but this has clearly not been sufficient to put it on a par with the developed world. The standard of living of Africans increased initially, but for the past 40 years there has been a steady decline. Many factors have contributed to this situation, but low productivity spawned by wrong economic policies and systems lies at the root of the decline. A number of countries have recently started moving away from these systems but it will take many years for them to catch up.

Many factors impair the productivity performance of individual firms. Economic policy is only one of these. Others are linked to financial factors, lack of foreign direct investment, shortage of high quality human resources that should be delivered by good education and training structures, infrastructure inadequacies and the basic values of workers. Entrepreneurial and management skills are scarce. Where these skills are available, the success of the organizations is both dramatic and lasting.

Much should and can be done to ensure a more competitive and contributing Africa. At the core is the development of national productivity movements. The notion of productivity improvement should be inculcated in the minds of workers and managers. A change in values should be led by heads of State who must understand that political and social success depends on economic success, which in turn depends on international competitiveness through productivity. The establishment of productivity centres in itself will not bring about the change required; it will merely create a focal point for guiding the change. Eventually managers and workers, teachers and labourers will have to be wealth creators rather than wealth seekers.

Africa is plagued with unemployment and it is natural that those who have work will do anything to remain employed. For this reason the underlying philosophy in Africa's productivity improvement endeavors should be to create more wealth with the same or more resources, and not to produce the same with fewer resources. A throughput growth philosophy is called for with guarantees of no job losses due to higher productivity. Such a philosophy must be supported by wealth-sharing policies.

As indicated throughout this study, a major human resource constraint in Africa is inadequate education and training to equip the workforce to function effectively in a competitive global environment. Upgrading a country's education system is a long and arduous task. Whilst it is necessary to do this for long-term results it is of great benefit to devise, develop and implement effective training systems to improve workers' skills in the short and medium term.

A second human resource constraint is that productivity and productive behaviour have never been necessary for survival in Africa. Policies should consequently be designed to inculcate this value at least in the workforce. Major programmes aimed at creating productivity awareness are called for. A particular skill scarcity is in the field of management. Because Africa does not play a major role in international trade, the management skills required to lead firms to international competitiveness cannot easily be developed.

Some African firms are doing well internationally although they suffer from the same constraints that others use as an excuse for poor performance. The difference is merely the quality of management. African cultures strongly prefer participative management styles. This requirement is so strong that it would be fair to say that unless managers adopt a participative style, they will probably fail. Promoting good labour relations and cooperation between management and workers should be high on the priority list of any productivity centre.

Africa needs entrepreneurs and skilled managers if it is to become successful in international markets. Strategies to develop people to fulfil this role are essential. The process of developing entrepreneurs should start at school, and management development should be a primary objective in any firm or organization. It has been shown that success is possible, provided management development gets proper attention.

Many physical constraints stand in the way of higher productivity in Africa. All the sub-Saharan countries, with the exception of South Africa, do not have sufficiently developed transportation, communication or energy infrastructures to support high productivity. It might be opportune for African productivity centres to focus first on increasing the effectiveness, efficiency and utilization of infrastructure providers so as to eliminate this very crucial physical constraint. Africa is also a capital-hungry continent and many firms do not have the means of acquiring the physical they need to increase their productivity. An important means of overcoming physical constraints in individual businesses is to become more proficient in production planning and control systems, as well as in planned procedures. It often happens that very old machines can still work productively and competitively, provided they are well-maintained and their utilization is maximized through effective management systems.

A study conducted by the World Economic Forum (1998) highlights key factors that affect foreign direct investment in the Southern African region. The findings are shown in Graph 2.

DELOITTE AND TOUCHE, 1998

Foreign direct investment plays an important role in stimulating economic growth in the developing countries because of the transfer of modern technology and production techniques, skills, management expertise, access to international sources of finance, and access to global markets. Many countries in the Southern African region lack sophisticated business skills.

The main impediments to increasing exports of African goods are the inadequate technological capability, financial problems, insufficient market information and institutional coordinating mechanisms (Biggs et al., 1994).

Lack of product development is a major constraint to future growth. Foreign manufacturers have access to management and technical expertise, whereas African entrepreneurs lack market information on basic issues such as buyer specifications in terms of labeling, packaging, and so on.

The most crucial constraints to increasing exports are on the supply side in Africa. Poor industrial capabilities are ascribed to poor entrepreneurial abilities and technological backwardness. Core factors such as physical and human capital, technological capability, financial ability, infrastructure and the size of domestic markets are mentioned in the literature. Another constraint is policy induced, and while 'complementary assets' are related to the trade infrastructure.

Learning is considered the key to the effective transfer and diffusion of technology and to achieving innovation, industrial growth and international competitiveness (Mytelka, 1998). Competitiveness is sustained by continuously improving products, processes, customer services and management routines. Investment in education and in research and development is essential in ensuring technological competitiveness.

Growth in technological know-how was possible in the East Asian economies due to the free movement of skilled personnel between organizations and countries. African organizations were isolated from the dynamics of efficient change in other parts of the world, notably advances in management techniques. Lall (1995) points out the role of capability factors that are still neglected in African industrialization. Industrial capability includes physical and human capital, labour skills, managerial and entrepreneurial ability and technological capability.”