This Day (Lagos)

17 August 2014

Nigeria: Strategy and Risk Management

African countries have often not lacked an understanding of what the challenges to their economic development are. The real challenge has sometimes been to just get on with "doing it" effectively and creating the required transformation. This requires an understanding of strategy as a modern management concept and its application to governance. Sadly, this is still lacking inside African governments, with only very few exceptions.

Tony Blair, the former British prime minister, had a famous strategy unit in 10 Downing Street that drove his governance agenda and ensured that a single thread of vision, communication and execution priority - in this case, education - ran through all the narratives actions of his ten years in office. Strategy and risk management have just come into their as legitimate functions in Africa's private sectors. Their application to the role of the government and the effectiveness of the state - which encompasses the private sector commercial space - is even more consequential for the future of Africa.

Strategy and risk management need to become embedded in governance thinking and architecture in Africa. Strategy is about shaping the future. It is about how to create the future of our imagination. If we are to create an African century, African countries will not succeed without a clear strategy and strategic thinking. That "how" is the difference between dreaming and visioning, and bridging the gap in between.

Strategy is first of all about thinking and about a way of thinking, before it becomes a matter of plans. As Max McKeown writes in the context of corporate organizations, but also applicable to nations, it is about "outthinking your competition". Thus strategic intent and ability are linked to the concept of worldviews, since strategy first requires strategic thinkers whose minds are open to vast possibilities. Second, worldviews, strategy formulation and strategy execution are intricately linked. Many African countries have been "planning" for decades but without the sort of strategic intent that has moved Asia forward in massive leaps. This requires focused objectives, an understanding of strategy management, especially in the context -framing choices and strategic possibilities, making the choice, and strategy execution management.

Africa's Future To conclude, then, contrary to the prevailing popular view about Africa Rising, the continent has no automatic, inexorable future. Growth, though a significant factor in economic development, is quite a different thing from transformation, which is what Africa really needs. Transformation means fundamentally improved indicators in such things as education and healthcare, infant mortality, life expectancy, infrastructure, and industrial production, not resource-driven economic activity or subsistence agriculture that produces a "growth myth", the myth that increases in GDP will make poor countries catch up with rich ones based on numbers that, while generally accepted as a standard of measurement, in fact have debatable exactitude.

The Cambridge University economist Ha-Joon Chang makes the provocative but thoughtful point that a society can become better off without marked increases in GDP. Thus the focus for African countries must remain that of a fundamental transformation in the structures of their economies, not the growth numbers that the current structures throw up. This implies a transformation away from the prevailing model that is presently being celebrated as the Africa "rising".

Africa's future is thus not on auto-pilot to some gilded age, but will be one that Africans create by their economic and public policy choices. What exists now, without doubt, is an opportunity for a turn-around in the continent's trajectory from that of its not-too-distant past. In this context, then, there is no need for a return to defeatist Afro-pessimism, but what the continent needs is realism and a determined focus on the right priorities.

The most important factors that will influence Africa's future, then, include: (a) whether African countries can develop and execute transformation strategies effectively and with discipline; (b); how Africa handles the continent's burgeoning population, projected by some estimates to hit 2.4 billion people by 2050 - will it yield a demographic dividend or a youth bulge?; (c) how African countries handle the challenge of jobless and non-inclusive growth; and (d) whether the continent can develop and effectively deploy its human capital, the most important investment for competitiveness in a globalized world.

All of this, of course, will have to be anchored on the foundation that is the real secret for the success of Africa's quest for prosperity - the African mind. That mind-set needs to change from one that is predominantly focused on day-to-day or short-term survival or "progress" as defined through this prism - not of a well-ordered society but of individual affluence in the midst of mass exclusion from prosperity - to one in which the mind-set takes a long term, past and future view of the world and the place of the African in that world, and what it takes to get to that place.

The African mind-set needs to place greater emphasis on "thinking it through" because action that is transformational is one that is guided by a philosophical or conceptual compass - a worldview. As we have seen, worldviews are the secret of the rise of the societies of the West and the Rest (mainly Asia). These worldviews develop through a combination of historical and cultural evolutions, on the one hand, and through the instrumentality of propaganda and public diplomacy to the citizens of a state and the rest of the world.

The place to begin is in the educational system. It is that combination of well-inculcated worldviews, knowledge and skills that produces human capital - the secret of transformation.

Being the concluding part of a paper delivered by Moghalu, deputy governor (Financial System Stability), Central Bank of Nigeria at the London School of Economics recently.

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