growth story

The ‘Africa rising’ bubble tells us why GDP growth is not a real indicator of prosperity

Africa's model of industrial growth is that it privileges the formal at the expense of the informal and big corporations at the expense of small.

Until a couple of years ago, all financial institutions and investment banks were celebrating “Africa Rising”, in a symphony of compliments that should have cautioned any reasonable African leader as well as citizens on the continent.

But what did they really mean when they were saying that Africa was rising? They simply meant that its gross domestic product, which is the conventional measure of economic growth, had been growing (on average) at a faster rate than in other regions of the world.

Of the world’s top 10 countries in real GDP growth rates for 2012, five were indeed African. Libya topped the list, with an astounding 124%, followed by Sierra Leone with 15.2%, Zimbabwe with 13.6%, Niger with 11.8% and Ivory Coast with 10.1%. A year later, in 2013, South Sudan was Africa’s best performer, with 29.3%. Ever since, other very fast growing economies included Angola, Chad and the Democratic Republic of Congo.

But GDP tells us nothing about the health of an economy, let alone its sustainability and the overall impact on human welfare. GDP is simply a measure of market consumption, which has been improperly adopted to assess economic performance.

Rebuilding Libya after the civil war has been a blessing for its GDP growth. Similarly, building the South Sudanese economy from scratch has invariably meant astronomic growth. Both these countries’ economies indeed bounced back from annihilation. Libya’s GDP growth was -66% in 2011, while South Sudan’s was -52% in 2012. As expected, their growth was short-lived. Libya went negative in 2013 and so did South Sudan right after.

In 2013, I warned against celebrating Nigeria’s economic “miracle” at the time when the country was about to become the continent’s largest economy. I indicated that Nigeria’s economic expansion was ephemeral, unsustainable and extremely unequal, which would soon trigger social conflict and a prolonged recession. Most media, business and a number of colleagues ridiculed my predictions. But I was right: the country’s approach to growth was self-destructive. No surprise Nigeria has fallen into one of the worst recessions on the continent.

And the list of these growth disasters continues. In 2016, only two African countries were in the top ten global GDP growth contest – Ethiopia and Ivory Coast.

But rather than reflecting critically on why this is happening, the continent’s politicians are putting their heads in the sand and simply hoping for more growth. This is very dangerous in the current global economic landscape. Economic growth is slowing down almost everywhere and there is little chance it will return to Africa in the foreseeable future.

Critical reflection missing

There are important structural reasons why one should be suspicious of the “Africa rising” discourse. Most fast growing African economies are heavily dependent on exports of commodities and foreign direct investment.

This makes them easily affected by the volatility of international markets. It also gives a false perception of national income. Indeed, most of the profits generated by foreign companies add to the “domestic” GDP but are highly unlikely to remain in the country.

Rather than obsessing over whether African economies are rising or not, the focus should be on how to make African people thrive. And these are two different things. Indeed, the problem with the continent’s current model of industrial growth is that it privileges the formal at the expense of the informal, big corporations at the expense of small businesses, large centralised infrastructure at the expense of decentralisation. In the end, this growth leads to more inequality and environmental destruction.

Rather than big business districts, African countries need labour intensive economies. As the only continent that will experience exponential population growth in the next decades, Africa will soon be faced with a major unemployment problem. This can only be addressed through widespread networks of small businesses, which are the real creator of good jobs, and doing away with the dominance of a few corporate giants, which are shedding jobs and are increasingly reliant upon automation.

The Africa Progress Panel, a think tank chaired by former UN secretary Kofi Annan, highlighted the crucial role smallholder farmers can play in making Africa food secure. It also noted that small farmers ensure sustainable livelihoods to people. And it pointed to the need to move beyond “big-grid” high carbon infrastructure and to renewable energy to turn conventional top down economic growth “on its head”.

In their own analysis, energy production must be “democratised” so that “Africa’s poorest and most vulnerable people could be reached through renewable energy on terms that drive down energy costs, stimulate small and medium-sized enterprises, generate jobs and reduce pollution-related health risks.”

Innovators point the way

In my new book, Wellbeing Economy: Success in a World Without Growth, I show numerous examples of African innovators using new communication technologies to support networks of small businesses and micro-enterprises.

Mobile connections are widespread across Africa. This means that there is an unprecedented opportunity to improve coordination between producers and consumers, cutting middlemen and the dominance of big retailers. On top of this, developments in other new technologies, from 3D printing to energy production through small-grids powered by renewable resources, are making SMMEs ever more competitive. From farming to manufacturing, the future may very well be dominated by customisation rather than mass production.

As summed up by Joe Kraus, one of the leaders of the dot.com boom of the late 1990s, the availability of new manufacturing technologies, which diversify production and multiple markets for local producers, makes the shift to a decentralised economy easier than ever. He says: “The 20th century was about dozens of markets of millions of consumers. The 21st century is about millions of markets of dozens of consumers.”

A new economy founded on networks of small businesses, a post-industrial form of artisanship and integrated smallholder farming is the best chance for Africa to develop sustainably as well as to generate the decent and fulfilling jobs that millions of Africans rightfully aspire to.

Lorenzo Fioramonti, Full Professor of Political Economy, University of Pretoria.

This article first appeared on The Conversation.

We welcome your comments at letters@scroll.in.
Sponsored Content BY 

What hospitals can do to drive entrepreneurship and enhance patient experience

Hospitals can perform better by partnering with entrepreneurs and encouraging a culture of intrapreneurship focused on customer centricity.

At the Emory University Hospital in Atlanta, visitors don’t have to worry about navigating their way across the complex hospital premises. All they need to do is download wayfinding tools from the installed digital signage onto their smartphone and get step by step directions. Other hospitals have digital signage in surgical waiting rooms that share surgery updates with the anxious families waiting outside, or offer general information to visitors in waiting rooms. Many others use digital registration tools to reduce check-in time or have Smart TVs in patient rooms that serve educational and anxiety alleviating content.

Most of these tech enabled solutions have emerged as hospitals look for better ways to enhance patient experience – one of the top criteria in evaluating hospital performance. Patient experience accounts for 25% of a hospital’s Value-Based Purchasing (VBP) score as per the US government’s Centres for Medicare and Mediaid Services (CMS) programme. As a Mckinsey report says, hospitals need to break down a patient’s journey into various aspects, clinical and non-clinical, and seek ways of improving every touch point in the journey. As hospitals also need to focus on delivering quality healthcare, they are increasingly collaborating with entrepreneurs who offer such patient centric solutions or encouraging innovative intrapreneurship within the organization.

At the Hospital Leadership Summit hosted by Abbott, some of the speakers from diverse industry backgrounds brought up the role of entrepreneurship in order to deliver on patient experience.

Getting the best from collaborations

Speakers such as Dr Naresh Trehan, Chairman and Managing Director - Medanta Hospitals, and Meena Ganesh, CEO and MD - Portea Medical, who spoke at the panel discussion on “Are we fit for the world of new consumers?”, highlighted the importance of collaborating with entrepreneurs to fill the gaps in the patient experience eco system. As Dr Trehan says, “As healthcare service providers we are too steeped in our own work. So even though we may realize there are gaps in customer experience delivery, we don’t want to get distracted from our core job, which is healthcare delivery. We would rather leave the job of filling those gaps to an outsider who can do it well.”

Meena Ganesh shares a similar view when she says that entrepreneurs offer an outsider’s fresh perspective on the existing gaps in healthcare. They are therefore better equipped to offer disruptive technology solutions that put the customer right at the center. Her own venture, Portea Medical, was born out of a need in the hitherto unaddressed area of patient experience – quality home care.

There are enough examples of hospitals that have gained significantly by partnering with or investing in such ventures. For example, the Children’s Medical Centre in Dallas actively invests in tech startups to offer better care to its patients. One such startup produces sensors smaller than a grain of sand, that can be embedded in pills to alert caregivers if a medication has been taken or not. Another app delivers care givers at customers’ door step for check-ups. Providence St Joseph’s Health, that has medical centres across the U.S., has invested in a range of startups that address different patient needs – from patient feedback and wearable monitoring devices to remote video interpretation and surgical blood loss monitoring. UNC Hospital in North Carolina uses a change management platform developed by a startup in order to improve patient experience at its Emergency and Dermatology departments. The platform essentially comes with a friendly and non-intrusive way to gather patient feedback.

When intrapreneurship can lead to patient centric innovation

Hospitals can also encourage a culture of intrapreneurship within the organization. According to Meena Ganesh, this would mean building a ‘listening organization’ because as she says, listening and being open to new ideas leads to innovation. Santosh Desai, MD& CEO - Future Brands Ltd, who was also part of the panel discussion, feels that most innovations are a result of looking at “large cultural shifts, outside the frame of narrow business”. So hospitals will need to encourage enterprising professionals in the organization to observe behavior trends as part of the ideation process. Also, as Dr Ram Narain, Executive Director, Kokilaben Dhirubhai Ambani Hospital, points out, they will need to tell the employees who have the potential to drive innovative initiatives, “Do not fail, but if you fail, we still back you.” Innovative companies such as Google actively follow this practice, allowing employees to pick projects they are passionate about and work on them to deliver fresh solutions.

Realizing the need to encourage new ideas among employees to enhance patient experience, many healthcare enterprises are instituting innovative strategies. Henry Ford System, for example, began a system of rewarding great employee ideas. One internal contest was around clinical applications for wearable technology. The incentive was particularly attractive – a cash prize of $ 10,000 to the winners. Not surprisingly, the employees came up with some very innovative ideas that included: a system to record mobility of acute care patients through wearable trackers, health reminder system for elderly patients and mobile game interface with activity trackers to encourage children towards exercising. The employees admitted later that the exercise was so interesting that they would have participated in it even without a cash prize incentive.

Another example is Penn Medicine in Philadelphia which launched an ‘innovation tournament’ across the organization as part of its efforts to improve patient care. Participants worked with professors from Wharton Business School to prepare for the ideas challenge. More than 1,750 ideas were submitted by 1,400 participants, out of which 10 were selected. The focus was on getting ideas around the front end and some of the submitted ideas included:

  • Check-out management: Exclusive waiting rooms with TV, Internet and other facilities for patients waiting to be discharged so as to reduce space congestion and make their waiting time more comfortable.
  • Space for emotional privacy: An exclusive and friendly space for individuals and families to mourn the loss of dear ones in private.
  • Online patient organizer: A web based app that helps first time patients prepare better for their appointment by providing check lists for documents, medicines, etc to be carried and giving information regarding the hospital navigation, the consulting doctor etc.
  • Help for non-English speakers: Iconography cards to help non-English speaking patients express themselves and seek help in case of emergencies or other situations.

As Arlen Meyers, MD, President and CEO of the Society of Physician Entrepreneurs, says in a report, although many good ideas come from the front line, physicians must also be encouraged to think innovatively about patient experience. An academic study also builds a strong case to encourage intrapreneurship among nurses. Given they comprise a large part of the front-line staff for healthcare delivery, nurses should also be given the freedom to create and design innovative systems for improving patient experience.

According to a Harvard Business Review article quoted in a university study, employees who have the potential to be intrapreneurs, show some marked characteristics. These include a sense of ownership, perseverance, emotional intelligence and the ability to look at the big picture along with the desire, and ideas, to improve it. But trust and support of the management is essential to bringing out and taking the ideas forward.

Creating an environment conducive to innovation is the first step to bringing about innovation-driven outcomes. These were just some of the insights on healthcare management gleaned from the Hospital Leadership Summit hosted by Abbott. In over 150 countries, Abbott, which is among the top 100 global innovator companies, is working with hospitals and healthcare professionals to improve the quality of health services.

To read more content on best practices for hospital leaders, visit Abbott’s Bringing Health to Life portal here.

This article was produced on behalf of Abbott by the Scroll.in marketing team and not by the Scroll.in editorial staff.