African Policy Innovation is Critical in a More Complex World

November 23, 2022
Africa’s economic transformation is uneven and faces significant headwinds, including a potential global recession, the war in Ukraine, energy and food crises, rising debt burdens, and continued instability in some countries. The world is changing quickly, and policymaking needs to change as well.

These factors, as well as positive trends such as increasingly urbanized workforce, rapid digitalization, and a rising middle class limit the usefulness of traditional policy frameworks for Africa’s economic transformation. In his new book, African Policy Innovation and the Political Economy of Public-Private Policy Partnerships Fred Olayele argues that it is essential for the public and private sectors to work much more closely together in order to successfully inform innovative policy that addresses poverty and income inequality on the continent. While it is clear that Africa’s challenges need African solutions, Olayele emphasizes that this must be understood in the context of how the various detours and interruptions on the continent’s development trajectory led to the emergence of the independent and heterogenous economies that are collectively referred to as Africa today. As more countries on the continent approach middle income status, harnessing public-private cooperation to lower transaction costs and advance social impact will become increasingly important.

At the same time, Olayele points to capacity constraints, particularly for innovating within government given how historical and structural barriers perpetuate fragmentation and traditional approaches. His thesis raises questions on the appropriateness of contemporary policy devices and economic management models that do not properly account for Africa’s large informal sectors and the Ubuntu philosophy which prioritizes shared humanity and collective consciousness over neoliberal individualism.

The African Center for Economic Transformation (ACET) is working in many of the areas that Olayele’s book sees as essential to Africa’s economic transformation. For example, in Kenya, ACET and its partner, the Kenya Institute for Public Policy Research and Analysis (KIPPRA) are undertaking the first Country Economic Transformation Outlook, which uses an innovative economic transformation framework, going beyond the traditional focus only on economic growth. It also focuses on the role of small and medium enterprises, as well as the digital economy.

Africa was successful in harnessing the benefits of the green and industrial revolutions and now there is great hope for the digital economy and the Fourth Industrial Revolution. Olayele argues this has implications for the innovation discourse. In part this is due to the unique nature of digitalization, whereby the private sector is far ahead of government in adopting digital solutions, and the tools and instruments are often developed and owned by the private sector, particularly the big global tech firms.

ACET’s perspective is that African governments need support to prepare for the digital future. To that end, ACET ran an AI challenge on regional infrastructure, providing a proof of concept that big data can be used to help governments make better informed investment decisions. We will soon be launching a similar AI challenge to better understand the gaps between digital skills and jobs that can influence educational approaches and partnerships between tech firms and government. There is a record number of students graduating from schools and universities, but many do not find jobs. The challenge aims to demonstrate that AI solutions can be used to better discern the gaps and design innovative policy to address them. Another example is ACET’s work on AI solutions that inform fiscal and monetary policy. While AI solutions are widely used in health, education, and agriculture, their use is more limited in innovative economic policymaking within Ministries of Finance or Central Banks.

Olayele emphasizes that as the world gets more complex, so does policymaking. Unlike in past eras, policymaking today is less linear and requires roles for a wide array of stakeholders, particularly the private sector. Likewise, as citizens see the benefits of innovation in their own lives, they want public services that are flexible and efficient. Realizing this objective will require increases in digital skills across government and continued reforms across Africa’s political economy institutions so they can identify and implement sustainable solutions that draw from global good practice. Olayele introduces the concept of policy entrepreneurship, which is under-explored, but will be necessary for innovative policymaking. Just as with corporate and social entrepreneurship, it will also require new approaches to risk management and experimentation. For example, Olayele notes that public-private partnerships (PPPs) have traditionally been leveraged to address challenges in physical infrastructure while their application to broader public policy problems is somewhat limited. He calls for public-private policy partnerships based on the involvement of private actors in traditional public sector operations in specific policy domains.

Policy innovation will require new frameworks and approaches for a less linear policymaking environment. ACET argues that economic growth is not sufficient, and economies need to transform across multiple axes, including diversification, exports, productivity, technological upgrading, and human well-being. But we know that the political economy of reform is messy. Olayele notes that political power and resource allocation patterns influence how efficient (or inefficient) economic and political institutions operate across the continent. Traditional power structures often lead to traditional policy approaches instead of supporting policy innovations.

There are of course examples of policy innovations such as the African Union’s African Continental Free Trade Area (AfCFTA), the Africa Medicals Supplies Platform, national COVID responses, and in some cases efforts to accelerate digitalization or expand public services. Going forward, it will be important to better understand the political economy drivers behind these policy innovations, particularly those that can support the continent’s economic transformation so they can be replicated and scaled.

About African Policy Innovation and the Political Economy of Public-Private Policy Partnerships

The book borrows from contemporary theories of policy change and raises some fundamental questions about the political economy of development in Africa. It examines the current knowledge and research about the role of public-private policy partnerships in the policy innovation discourse. From local communities and NGOs to African governments and international development agencies, the author advances a multi-stakeholder development policy and programming framework which recognizes Africa’s vastly heterogenous economies and societies.

Fred Olayele’s diverse career spans academia, government, finance, and international development. A distinguished economist and public policy expert, his research interests and practice areas cover trade policy, innovation, FDI, urban policy, political economy, and inclusive development. He is Director, Centre for African Research and Business at the Sprott School of Business, Carleton University, Canada.

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