23 January 2013

Rwanda: Should the 21st Century State Run Like a Company?

Have you ever wondered why some corporations have a larger turnover than most developing nations (Gross Domestic Product) and why the CEO's of some of big business as command more respectthe President of your average developing nation? It is time for presidents to think and act like CEO's.

The affairs of the 21st Century state should run more like a business; it should keep an eye on costs and strive to balance its budget, even if that means cutting or trimming services we all like.

Before you sneer and move on to another piece, you need to appreciate the fact that the challenges facing the 21st century developing state can no longer be met by doing 'business-as-usual'.

Of course without deeper analysis, the notion of having Heads of State and Government to think like a CEO of a company does not sound feasible; however, indulge me if you may and join me on a walk down this path.

The Shareholders: A company should generally be managed in the best interest of the shareholders and, in the case of the state, this should ideally be the citizens. The company does this by ensuring that the costs are minimised and the dividend payout to the shareholder is high. The dividend payout for the shareholders in a state is not necessarily monetary.

Value proposition: The core business of the state should be designed as services offered to the citizens such as security, energy, water, social security including healthcare, good roads etc. Ultimately, the state has to market and avail high-quality products and services to the consumers who, in this case, are the citizens of the state.

Consumers: The consumers of the products of the state are not just the nationals of the state, the products are available and of interest to foreign actors, including tourists, travelers and investors. A tourist is more likely to come to a state because, among others, it is secure, replete with well managed and diverse attractions and assured of excellent healthcare.

Partners: The partners are those groups or individuals that capitalise or re-capitalise the state-company. This category provides funds to the state through FDI and through grants or loans.

Competition: Like a company, the state needs to be aware of stiff competition from other states, which are in position to provide better products and services. A state needs to look at, for instance, who among its competitors have more visibility and better positioning or provide better products than it does. Consumers including some of the shareholders would opt to invest their resources in another state where there is a better value proposition.

The shareholders, consumers, and partners have the powers to influence the company. An underachieving CEO can be stood down through the established procedures which, in the case of a state, would be Elections.

There are many parallels to be drawn between the running of the state and a company. With the current shape of global inter-linkages and focus on economics, it goes without saying that the decision-making processes should be aligned accordingly with more emphasis being placed on a better value proposition, coupled with aggressive and sustained marketing.

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