Success stories for a leading state role

Ethiopia has the fastest growing African economy over the past decade, and has achieved an average rate just in double digits. This has fueled arguments over its model, sometimes called the developmental state. At the annual debate of the Business Council for Africa in London on Tuesday, Zemedeneh Negatu, chairman of the Washington-based FairFax Africa Fund, argued that the model complemented the contribution of the private sector. It is influenced by positive experiences in China and East Asia.                                                                                

  • The consensus from the podium at the conference was opposed to the model. Atiku Abubakar, the former Nigerian vice-president, called for limited government intervention in the economy. The non-executive chairman of Norilsk Nickel urged government to “move out of the way”.
  • Negatu termed Rwanda another developmental state. Its economic transformation since the genocide in the mid-1990s is impressive, built upon a reputation for rapid decision-taking and the shared vision of government officials. A former minister for Africa in the UK government said that a mining license could be granted in six hours. We learnt from the same source that President Yoweri Museveni of Uganda favoured the model.
  • There are other potential converts. The Zimbabwean foreign minister, Sibusiso Moyo, disclosed that the chief executive of the Rwanda Development Board had visited Harare for talks.
  • A core element of the developmental state is the creation of industrial parks. Senior advisors to the FGN have visited Ethiopia, and we understand that the park at Nawassa made a positive impression. The Ethiopian government has proposed a spur to the Chinese-built Djibouti to Addis Ababa railway to serve the park, which was constructed in just nine months.
  • We can quibble about the quality of the Ethiopian national accounts and complain that certain sectors (banking and telecoms) are closed to foreign investors. Political analysts may have something to say about the concentration of power, too. Yet the two said examples of the model have delivered consistently strong growth in per head terms sufficient to lift people out of poverty. Far from moving out of the way, the government in both cases has a directing role in development and a clear mission, along with a habit of getting things done.

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