Education and Innovation, a Glimpse of Hope for Africa

Leading international scholars present their cutting-edge research at Bocconi every year, in front of faculty and students. In order to make this work accessible to a larger audience, Bocconi Knowledge publishes the summaries of the scientific and policy seminars organized by the IGIER research center, written by the students participating in the IGIER-BIDSA Visiting Students Initiative.

The conventional view of Africa– often reminded in the last few days, after the assassination of the Italian Ambassador to Congo - is that of a depressed continent, in which civil wars and rampant corruption hinder the ability of African nations to take advantage of their rich mineral endowments and more generally to achieve satisfactory economic growth. The outburst of COVID-19 darkened the picture, to the point that it is quite common to think that Africa will not grow in the next decade. Several experts, however, increasingly disagree with this bleak view.

At "Africa's turn? Socioeconomic and business trends in the continent", a seminar co-organized by IGIER Bocconi and London Business School's Wheeler Institute for Business and Development, Leonard Wantchekon, professor at Princeton and founder of the African School of Economics, and Nick Hughes, Co-founder of M-KOPA and founder of M-PESA – two extremely successful and innovative firms located in Africa – offered a less pessimistic perspective on Africa. The event was moderated by Eliana La Ferrara, Professor at Bocconi and Scientific Director at the Laboratory for Effective Anti-Poverty Policies (LEAP).

Africa's current economic situation was the starting point of the discussion. The continent has been growing at an annual 4% in the last 20 years but even though the pandemic has stopped this process, growth will resume in the medium term, Wantchekon says. Indeed, according to the Princeton professor, while the continent may appear stuck if compared with South-east Asia experiences, it shows important signs of vitality when seen in isolation. African economies are becoming less and less dependent on mining and natural resources, their service sectors are growing at a steady pace, and this is fueling unprecedented and sustained economic growth.

Huges argues that a key engine for African progress is constituted by technological innovation. Business is often seen as difficult or even impossible in Africa due to lack of market knowledge, infrastructure and energy networks. But these problems can be largely sidestepped, and only appear insurmountable if viewed from a Western perspective. Take energy and infrastructure: In the western world it is common to have huge energy plants and a grid network that reaches the vast majority of the population. This business model is not viable in Africa due to the morphology of the territory and the low population density. Seen from this perspective, Africa seems doomed. This is no longer so when one considers technological innovation. The success of firms like M-KOPA and M-PESA testifies to the large benefits associated with changing the paradigm from the conventional centralized model to a more innovative distributional one. The latter model does not rely on large, centralized infrastructure. It can decentralize energy creation in small local solar panels and banking by using mobile phones as mean for money transfers.

These innovations can only succeed if they are supported by a combination of technical and deep market knowledge. According to Wantchekon, this raises the second key issue: education and human capital are central for Africa's future. They can spur a local entrepreneurial class and foster technology adoption. There are encouraging trends in this direction, and Wantchekon believes that these trends need to be strengthened both in quantity, to match population growth, and in quality. In particular, African government are refocusing and need to do so much more in the future, toward investing in upper tail human capital, the skills and capabilities associated with high levels of education and research. By creating an indigenous academic elite capable of thinking creatively and address Africa's problems is the mission of the African school of economics, funded in Benin in 2014. Thanks to similar initiatives, a great class of young entrepreneurs, policy makers and researchers was created and it is now growing quickly in numbers.

As stressed by Wantchekon and Hughes, this effort also requires tackling the gender gap. Obviously, the great heterogeneity of the countries does not allow a continent-level discussion of the topic. For example, some African countries like Benin, Senegal and Cameroon are world-leaders in gender equality. On the contrary, the Sahel countries, due to a cultural adversity toward female education, have seen the gender gaps increase in recent years. However, in these countries the effort from governments and institutions like the African Development Bank has strongly intensified, so we should be optimistic about an overall reduction in the gender gap in Africa, which should also help economic and social development.

It is always tempting then to think: ok, there are improvements on the ground, but what about massive political failures at the top? Of course, politics plays a key role in Africa. According to Wantchekon and Hughes, though, we need to abandon the African stereotype of endemic corruption. The rise of democratic governments throughout Africa, combined with the social media enhanced organizational capacity for pacific protest movements has helped a lot. Moreover, ethnic conflicts are not frequent anymore thanks to stronger ethnic integration. The element that now must be fixed is the bureaucratic incompetence that hinders economic development.

The solution proposed by Wantchekon and Hughes is multi-faceted. On one side, technology advancements allow for stricter control by citizens parallel to increased productivity for the bureaucratic apparatus. On the other side, appropriate institutions are needed to cope with the specificities of African culture and realities. Even if democratic institutions reflect the strong popularity for democratic values, an effort to introduce more civil engagement in policy making may be beneficial, because this consensual process would resemble the African institution of achieving consensus through community discussion. In this respect, Africa's culture can be seen as a competitive advantage that must not be undervalued. For example, the strong sense of community combined with a great desire for freedom allows for enhanced social mobility (e.g. kids education is seen as a community responsibility) while the creative thinking predisposition is the staple of successful business companies.

In conclusion, thanks to its young, optimistic and resilient population Africa's future seems brighter than commonly thought and the digital revolution that is usually associated with more developed countries may be a primary driver of African development in the next 20 years.