Summit showed why we must slash red tape, invest in schools

By: ATUL SINGH

Adam Smith, a professor of moral philosophy who practised in the Scotland of Enlightenment, would have been pleased last week.

For the first time, the Global Entrepreneurship Summit was held in sub-Saharan Africa and US President Barack Obama turned up.

“Africa is on the move,” declared the president, who paid obeisance to Prof Smith’s idea that humans have the propensity “to truck, barter and exchange”.

Prof Smith, a Presbyterian, threw the gauntlet to Catholic mercantilists by declaring that the wealth of a land lay not in its gold and silver, but in the productive capacity of its people.

He saw trade as a win-win situation with the butcher, the brewer and the baker focusing on their crafts and then exchanging the fruits of their efforts, thereby allowing all to consume more meat, whiskey and bread.

Africa, a continent blighted by the legacy of imperialism and the death kiss of bureaucratic socialism, is embracing Prof Smith and ushering in a new zeitgeist.

At the summit, Mr Obama declared that his administration provided more than $1 billion of support to entrepreneurs around the world last year.

LESS THAN A DROP IN THE OCEAN

This is less than a drop in the ocean when the global economy is valued at over $77 trillion. Yet it is a start.

The summit was significant for three reasons.

First, it set out a new economic paradigm for Africa. By 2050, Africa’s population will double to nearly two billion.

In 15 years, 370 million youth will enter the job market.

There is no way governments or big business can employ that number.

There are limits to the number of bureaucrats, soldiers and peons that the African taxpayer can fund.

Besides, governments are better off investing in education and infrastructure. Even building ports and railways cannot create enough jobs.

Eventually, it is new small and medium-size enterprises that will employ young Africans.

A key contribution of the GES is that it makes entrepreneurship “cool” for the young and their leaders.

Second, the GES recognised the economic potential and entrepreneurial energy of Africa.

Silicon Valley is the Mecca of entrepreneurship.

It has geniuses like Steve Jobs and Elon Musk.

Bold capitalists take bets on them and engineers march together to transform the planet.

The reality is a little different to the romance. Silicon Valley has turned bourgeois in many ways.

The Facebook generation far too often focuses on its rich world problems and does not give a damn about the fact that more than 750 million people lack access to safe water.

In fact, most people in Silicon Valley now work for big companies like Apple, Google and Facebook while people in many parts of the poorer world have no option but to hustle.

SILICON VALLEY

Hardly does anyone in Silicon Valley struggle like women in Lesotho who rear poultry and pigs to make ends meet. This is a more riveting story than yet another iPhone app.

Survival in many poor countries is an incredibly entrepreneurial affair.

Slums in Asia, Africa and Latin America bustle with initiatives and communities; from barber shops to childcare centres.

Tapping this energy and providing an institutional support system for entrepreneurs to thrive is a big challenge for these countries.

Some experiments like rainwater harvesting, microcredit to women and chronicling local innovations have been successful.

These have to be replicated and multiplied.

Third, as Mr Obama pointed out, governments still matter.

Corruption blights possibilities for individuals and economies.

WASTE TIME AND ENERGY

If entrepreneurs have to spend half their day running from pillar to post to get approvals and bribe functionaries, they waste time and energy.

Starting something is hard but corruption makes it daunting.

The worst aspect of this phenomenon is that governments end up robbing their people instead of building schools, hospitals and roads.

Entrepreneurship in emerging economies would get a great shot in the arm with simple reforms.

Investing in schools and slashing red tape would be a good start. Figuring out how to clean garbage would help too.

The Lebanese are descendants of Phoenicians and legendary entrepreneurs, yet Beirut residents are drowning in a sea of trash.

In India, 80 per cent of sewage flows into rivers, damaging health and endangering the lives of millions.

Many of these are farmers and fishermen going out of business and having to flee to urban slums.

While entrepreneurship is empowering, there are certain things that require collective action.

Making laws, providing schooling and cleaning cities or rivers are things only governments can do and have to.