How do economies grow rich and what factors should be in place to drive innovation, job creation and rapid GDP growth?
It is not surprising that Tesla Inc, founded by the world’s richest man Elon Musk has a market capitalisation of $1.07 trillion, higher than the gross domestic product (GDP) of any major economy in Africa.
According to Investopedia, the Gross Domestic Product (GDP) provides a country’s economic snapshot or scorecard.
This is because the GDP comprehensively measures the monetary value of all the products and services that are produced in a country within a given period of time.
The pertinent question we should be asking ourselves is whether the 70,000 workers of Tesla are more efficient and productive than the 1.20 billion entire population of the African continent?
It is glaring that the United States, Asia, and Europe have leaders who are nimble enough to unlock the potentials in their economies; their economies are not monolithic and it successfully evolved from manufacturing in the 20th century to service and technology base in the 21st century.
African countries that harbor some of the richest natural resources paradoxically also have the highest number of poor populations on the planet showing that detrimentally relying on the potentially depleting resources of the earth to achieve economic growth is not a way to go.
Of course, bad leadership is also an issue as well as misguided/socialist economic policies by often repressive regimes.
The continents leaders who drenched in the stench of corruption have siphoned money out of the countries they rule, leaving the young generation to bear the brunt of incompetency.
Africa has lost nearly $89bn a year in illicit financial flows such as tax evasion and theft, amounting to more than it receives in development aid, a United Nations study has shown.
It is important to note that the former chairman of the Economic Financial Crimes Commission (EFCC) once said more than $380 billion has either been stolen or wasted by Nigerian governments since independence in 1960.
One fundamental reason Africa countries are more likely to be poorer than their counterparts in Asia is the inability of policy makers to diversify their economies away from reliance on national resources.
Policy inconsistencies and populist ideology is another elephant in the room.
For instance, the Nigerian central bank has imposed capital control measures and other stringent rules that are stoking inflation and creating foreign exchange volatility.
The jobless rate in Nigeria rose to 33.3 percent in the three months through December, according to a report published by the National Bureau of Statistics.
That’s up from 27.1 percent in the second quarter of 2020, the last period for which the agency released labor-force statistics.
The African Continental Free Trade Agreement (AfCTA) should serve as a springboard to push the most innovative African firms to the top, while the explosive growth of Fintechs and promise of firms like MTN to revolutionise the payments in Nigeria space should not be stifled by entrenched banking interests.
African countries, especially the big 3 of Nigeria, Egypt and South Africa should focus on reforms that produce faster economic growth which allows innovation to thrive in 2022.