Unleashing Prosperity: Entrepreneurship and Governance in Africa
“In order for African people to prosper, they need functioning institutions that secure property rights and the rule of law, so entrepreneurs can create mass prosperity.”
In this paper, Magatte Wade explains why good governance and market-based enterprise are vital for increasing prosperity and reducing poverty in Africa, and how the innovative use of Special Economic Zones could be a key tool in making these a reality.
Summary of Research Paper
What does it take to end poverty?
We have long been accustomed to the idea that Africa is the world’s poorest region. Yet, we have so often failed to accurately diagnose why this is, or how it could change, Magatte explains.
The truth is, trying to end poverty in Africa through increasing education, healthcare, and aid does not work, Magatte states. These “solutions” attempt to mask the symptoms of poverty, but do not treat its causes. They also create their own problems, such as aid dependency, under-employment, and economic stagnation.
In this paper, Magatte reveals that the real root of poverty in Africa is its poor governance structures and lack of market orientation. Nations, both inside and outside of Africa, that have focused on these areas have witnessed the most successful development trajectories over the last 50 years.
History also tells us both are necessary for growth and prosperity to germinate. And change is not wrought by outsiders. Magatte emphasises that domestic leaders must drive the momentum of their nation’s development.
How do we put this into practice?
The building blocks of prosperity are governance and market-based reform. These consist of two models: nations and zones.
Nations. Botswana, and more recently Rwanda, are the strongest and fastest growing economies on the continent, Magatte identifies. They demonstrate that an internal drive—and strong political commitment—to dismantle clientelist privileges, establish the rule of law, and serve the entire population through fair market access can transform whole nations.
Zones. Mauritius successfully uses special economic zones to create smaller, liberalised environments within the nation, attract investment, and promote exports.
The governance innovation
This paper sparks discussion around the idea that zones could be used not only to create pockets of economic dynamism within a country, but also to catalyse governance reform where political will is lacking at the national level. These exciting innovations provide solutions that harness the potential of African entrepreneurialism and forge a scale-able blueprint to transform its economic future.
Magatte notes that careful thought must be given to who will govern the special economic zones, how to capture the enthusiasm of aspiring entrepreneurs, and where to strike a balance between domestic political buy-in with foreign private investor interest. But legally distinct zones provide an exciting opportunity to create the common law basis, respect for indigenous African traditions, and local economic potential necessary to unleash the continent’s potential.
By harnessing the potential of these reforms, Magatte emphasises that Africa can transform its destiny and create a prosperous future.
