Culture & Doing Business in Africa

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

I present a cultural framework for investing in Sub-Saharan Africa. If you are looking to invest in Africa, it is important to be aware of the cultural characteristics of the various countries and how they affect the likelihood of success. In general, most African countries have collectivist cultures. Still, there are differences. South Africa ranks relatively high for individualism, for instance.

I rely on the 2019 soft power rankings by the Nanyang Centre for Emerging Markets (CEM) Singapore for a quantifiable proxy for culture. Thereafter, I juxtapose this culture proxy with the 2019 World Bank Doing Business rankings to identify countries with cultural characteristics and business environments likely to make investing in them worthwile endeavours. And for the selected countries, I identify the sectors that are best suited to these characteristics.

The framework differentiates between investments aimed at production, consumption or both. Because even when the production of a good or service may not be ideally suited for some countries, consumption via importation may be viable. So, for instance, high-end goods, which may not be ideally suited for production in many African countries ex-South Africa, in light of the individualism-innovation nexus, may still do very well if imported, since collectivist face-saving cultures make even those not well-to-do aspire to the consumption of high-end goods.

Based on CEM’s 2019 Emerging Market Rankings[1], I identify the following top 2-3 countries for each region as ideal investment destinations. Botswana is the only African country in the rankings’ 2nd-level “accelerating” EM countries. South Africa and Namibia are the only SSA countries in the 3rd-level “intermediate” EM countries category, while the remainder Ghana, Senegal, Rwanda, Uganda, and Kenya form part of the penultimate 4th level “early” EM countries category of the rankings.

These choices correlate with the cultural thesis of my prior “culture and development” paper[2], which put Southern African countries on top. The CEM 2019 Soft Power Ranking[3] similarly identifies South Africa, Namibia, Ghana, Senegal, Kenya, Rwanda as the top 5 SSA countries with soft power. I recommend the top 2 countries in each region based on these indices. They are thus Botswana & South Africa (Southern Africa), Ghana & Senegal (West Africa) and Rwanda & Kenya (East Africa).

Figure 1: SP-DB mapping of African countries

Thus, my framework relies on these factors – culture, doing business ranking, EM status, & soft power ranking – to recommend sectors in Africa that are likely to be successfully tapped by foreign investors. I rely on the Global Industry Classification Standard (GICS)[4] in this regard.

  1. Energy

Oil & gas exploration decisions are not primarily culture-based. If there is no prospect of finding oil & gas resources in a jurisdiction, it does not matter what cultural variables there are. But in areas where exploration does take place, culture does matter. The pervasive and entrenched corruption in the Nigerian oil & gas industry has cultural underpinnings, for instance.[5] There is also a cultural element to why a robust indigenous value chain around oil & gas exploration has been elusive in Nigeria, the continent’s top oil producer. Government-owned refineries, the only ones in any case, are moribund or underperforming. Instead, fuel is largely imported.

Would it be profitable for a foreign investor to invest in a refinery in Nigeria, say? It is highly unlikely without local support. But a local investor like Aliko Dangote, Africa’s richest man, who is currently building a refinery in Lagos, Nigeria’s commercial capital, is incidentally likely to be successful, however. This is because in addition to his having access to foreign capital, he is also fully enmeshed in the political, social and cultural fabric of Nigerian society.[6] A foreign investor looking to invest in the sector would thus be well-advised to invest through such an influential local investor; if at all.

  1. Materials

A good example in this regard is cement manufacturing, which with increased automation, no longer requires as much manpower as in the past. And with automation comes requirements for new skillsets and know-how, most of which are scarce on the African continent and take time and resources to acquire locally. Top-tier management talent is also in short supply. The pan-African success of Nigeria’s Dangote Industries, which relies a great deal on Indian expatriates, who are world-renowned for their work ethic[7], to fill the skills gap bears lessons in this regard.[8] So even when an investment decision on a materials venture on the continent relies on where the key raw material is located, disadvantages related to skilled labour and capital could easily be overcome with foreign alternatives.

The success of the Chinese in illegal Ghanaian gold mining, which contiunes unabated despite government action, is also a case in point.[9] Chinese entrenchment in Ghana’s mining sector is on the back of a pervasive local culture of artisanal-type but illegal “galamsey” small-scale mining practice. With many poor Ghanaians dependent on galamsey for their livelihoods, and the Chinese now major players, it has become very difficult for the government to clean up the sector. The illegality is not at all endorsed here. But the cultural element as a factor in the success of the Chinese in the Ghanaian gold mining industry is noteworthy.

  1. Industrials

Aerospace & defence, machinery and transportation industry groups thrive in innovative cultures. Southern African countries are ideal. They score highest for individualism and other relevant cultural dimensions. Incidentally, these industry groups already thrive in South Africa. Would they do similarly well in the identified countries in East and West Africa? The low scoring for individualism and high power distance rankings do not recommend them well for such investments.

  1. Consumer Discretionary

Downstream automobile production is enjoying a resurgence in Africa. Foreign brands have set up bases (or plan to) in Rwanda, Kenya and Ghana.[10],[11],[12] Unsurprisingly, much more upstream activities (e.g. design) take place in South Africa, which already has a thriving automobile industry. There is easily a cultural explanation for why the labour-intensive but less innovative downstream activities (e.g. assembly) are more viable in East and West Africa while a broader spectrum of the value chain thrives in South Africa. On the consumption side, however, almost every African country qualifies.

Retailing (apparel, etc.) is also more lucrative in South Africa, where a mall culture is already entrenched. The case of South African retailer Woolworths is instructive.[13] When it expanded to West & East Africa, it failed. Still, its business continues to thrive in South Africa. Incidentally, relatively small-scale local retailers, who import apparels etc., thrive in these same West & East African countries.

  1. Consumer Staples

Food & staple retailing has been found to be successful in almost all African countries. South African retailer Shoprite’s success in its African ventures is a good example; albeit they are floundering lately. And while largely a low-cost retailer, this has not been primarily the source of its competitive edge in its operations outside South Africa. A local culture of projecting success in Nigeria, say, means a visit by the average shopper to Shoprite during the weekend is more than just about shopping.[14] In general, food, beverage & tobacco investments have been similarly successful across the continent. Still, foreign and local firms involved in the industry have had to rely on robust market research on local cultures to succeed.

  1. Healthcare

High-end pharma activities are largely not viable in most African countries. Still, when a venture relies on certain local factors for success, it is still feasible. 54gene, a Nigerian healthcare startup, leverages on the local population for Africa-focused genetics research.[15] That is, even as local expertise is scarce. Diaspora expertise fills this gap. And much of its output feeds into ventures abroad. So, this is an example of a high-end innovative venture that uses the advantages of a large population and overcomes the expertise constraint using highly qualified diaspora Africans who also understand the local culture.

  1. Financials

There are now quite a number of pan-African banks; mostly headquartered from South Africa & Nigeria. Insurance has not been similarly successful across Africa, with West Africa the continental laggard.[16] Insurance unsurprisingly thrives in South Africa, which scores high on individualism and low on power distance. I would not advise foreign investments in the insurance sector in West & East Africa, for instance. But my framework would certainly recommend one in South Africa.

  1. Information Technology

Only southern Africa comes close to being well-suited for high-end tech hardware and semiconductor production. The latter is virtually non-existent on the continent, in any case. Low-end tech hardware like PC assembly could thrive almost anywhere. But such low-end tech hardware production is already being phased out. A Chinese firm manufactures phones on the continent, though.[17] Software and services, on the other hand, could be viable in most African countries. The success of Nigerian tech talent firm Andela is a good example. Call centres would certainly also thrive across the continent, since talking is a favourite past-time.

  1. Communication Services

Collectivism, high power distance scores, etc. support talking as a past-time in most African countries. The huge success of South Africa’s MTN in Nigeria is an ideal case of how an investment decision based on a cultural practice proved to be quite profitable.

  1. Utilities

Except for South African countries, where there is relatively high state capacity, my framework would not recommend an investment in the African utilities sector; not in the traditional way, at least. Innovative solutions like off-grid, solar & other renewable power solutions are proving to be viable, though. But they tend to be development-oriented and better suited for NGO-type ventures.

  1. Real Estate

My framework would not recommend REITS ex-South Africa. There is a culture of direct house ownership for those who can afford it. And for rented real estate, there is a huge informal element in most African countries.

 

Appendix
Table 1: Soft Power v Doing Business

Soft Power Ranking Doing Business Ranking
South Africa 19 82
Tunisia 29 80
Botswana 31 86
Namibia 40 107
Ghana 41 114
Morocco 47 60
Senegal 52 141
Egypt 54 120
Sierra Leone 55 163
Kenya 57 61
Zambia 61 87
Rwanda 62 29
Algeria 65 157
Malawi 66 111
Gabon 68 169
Mauritania 69 148
Ivory Coast 73 122
Uganda 74 127
Zimbabwe 75 155
Burkina Faso 76 151
The Gambia 77 149
Tanzania 78 144
Togo 79 137
Madagascar 80 161
Guinea 81 152
Nigeria 82 146
Mozambique 85 135
Libya 86 186
Angola 87 173
Mali 88 145
Niger 89 143
Cameroon 91 166
Congo Repubic 92 180
Chad 93 181
Sudan 95 162
Burundi 96 168
CAR 99 183
DRC 100 184
South Sudan 102 185

Source: Nanyang CEM, World Bank

 

References
[1] Nanyang Centre for Emerging Markets (2019). 2019 Emerging Market (EM) Rankings: Feeling the pulse of an investor. Retrieved from http://www.nbs.ntu.edu.sg/Research/ResearchCentres/CEM/Research/Pages/Annual-Emerging-Market-Rankings.aspx

[2] Raji (2019). Culture & development: The case of Africa. Available at https://rafiqraji.com/2019/10/31/culture-development-the-case-of-africa/

[3] Nanyang Centre for Emerging Markets (2019). Revisiting Soft Power: 2019 Rankings. Retrieved from http://www.nbs.ntu.edu.sg/Research/ResearchCentres/CEM/Research/Pages/Annual-emerging-market-soft-power-index.aspx

[4] S&P Global & MSCI (2018). Global Industry Classification Standard. Retrieved from https://www.spglobal.com/marketintelligence/en/documents/112727-gics-mapbook_2018_v3_letter_digitalspreads.pdf

[5] Ehiemua, S. (2015). Nigeria crude oil: Sources of corruption and economic disparity in the nation. European Journal of Research in Social Sciences, 3 (4), 76-83. Retrieved from https://www.idpublications.org/wp-content/uploads/2015/04/NIGERIA-CRUDE-OIL-SOURCES-OF-CORRUPTION-AND-ECONOMIC-DISPARITY-IN-THE-NATION.pdf

[6] Akinyoade, A & Uche, C. (2016). Dangote Cement: An African success story? ASC Working Paper 131/2016. Leiden: African Studies Centre. Retrieved from https://www.researchgate.net/profile/Akinyinka_Akinyoade/publication/311596676_Dangote_Cement_an_African_success_story/links/58502a6108aecb6bd8d20efb/Dangote-Cement-an-African-success-story.pdf

[7] Indians are most hardworking workforce in the world: Survey. (2018, November 8). Financial Express. Retrieved from https://www.financialexpress.com/jobs/indians-are-most-hardworking-workforce-in-the-world-survey/1377344/

[8] Akinosho, T. (2017, December 21). Aliko and the 40 Indians. Africa Oil + Gas Report. Retrieved from https://africaoilgasreport.com/2017/12/kickstarter/aliko-and-the-40-indians/

[9] Burrows, E. & Bird, L. (2017, May 30). Gold, guns and China: Ghana’s fight to end galamsey. African Arguments. Retrieved from https://africanarguments.org/2017/05/30/gold-guns-and-china-ghanas-fight-to-end-galamsey/

[10] Uwiringiyimana, C. (2018, June 26). Volkswagen opens Rwanda’s first car plant. Reuters. Retrieved from https://www.reuters.com/article/us-volkswagen-rwanda/volkswagen-opens-rwandas-first-car-plant-idUSKBN1JN0NF

[11] Herbling, D. (2018, April 6). Nissan eyes bigger East African market with Kenya auto plant. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2018-04-05/nissan-eyes-bigger-east-african-market-with-kenyan-vehicle-plant

[12] Leggett, D. (2018). VW to invest in Ghana and Nigeria. Just Auto. Retrieved from https://www.just-auto.com/news/vw-to-invest-in-ghana-and-nigeria_id184309.aspx

[13] Minto, R. (2013, November 7). Woolworths: Nigeria not so easy. Financial Times. Retrieved from https://www.ft.com/content/a3539fad-e61a-3665-9a60-e9a1035d2b2f

[14] Chutel, L. (2016, December 1). Shopping Right: The grocery chain that became Africa’s biggest retailer by betting on its middle class. Quartz. Retrieved from https://qz.com/africa/833966/the-grocery-chain-that-became-africas-biggest-retailer-by-betting-on-its-middle-class/

[15] Monks, K. (2019, September 26). Unlocking the life-saving secrets of African DNA. CNN. Retrieved from https://edition.cnn.com/2019/09/26/health/unlocking-the-life-saving-secrets-of-african-dna-intl/index.html

[16] Davis Jr, K. (2013, September 7). The state of West and Central Africa’s insurance industry. Ventures Africa. Retrieved from http://venturesafrica.com/state-west-central-africas-insurance-industry/

[17] Kazeem, Y. (2019, March 29). The biggest mobile phone maker in Africa is going public in China. Quartz. Retrieved from https://qz.com/africa/1583473/chinas-transsion-of-african-tecno-phones-to-ipo-in-shanghai/

Culture & development: The case of Africa

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

1.0       Introduction
Does culture matter for development?[1] A significant body of research identifies “intergenerationally transmitted” biological and cultural characteristics that affect economic development.[2] Why are some countries rich and others poor? Significant and persistent long-run effects of geographical, historical and cultural factors on productivity are attributed. And despite the broad consensus that favourable geography, strong free markets and property rights institutions contribute to development, there is evidence that these factors are by themselves inadequate. In other words, countries with strong institutions and geographical advantages could still flounder. Why? Culture is attributed.

According to Boas (1911), culture is “an integrated system of symbols, ideas and values that should be studied as a working system, an organic whole”.[3] Another definition, by Bates & Plog (1990), posits culture is “the system of shared beliefs, values, customs, behaviours, and artifacts that the members of society use to cope with their world and with one another, and that are transmitted from generation to generation through learning.”[4] Development, on the other hand, is the “process of creating and utilizing physical, human, financial, and social assets to generate improved and broadly shared economic well-being and quality of life for a community or region” (Seidman, 2005).[5]

Mokyr (2016) establishes a strong link between culture and development.[6] Mokyr argues that the unprecedented and sustained technological progress in the West stems from a significant change in “cultural beliefs about the natural world and the diffusion of knowledge” in 17th to 18th century Europe. A contrast is made between the cultural evolution in Europe, where it was dynamic, and in China, where it was relatively static. An openness to new knowledge in the West encouraged the continued challenge of old beliefs with evidence. In the East, however, awe for long-held beliefs engendered conservatism. Put simply, the West encouraged new ideas and adopted them once they passed the test of rigorous scrutiny. On the other hand, the East largely held on to its orthodoxies.

Does China’s later economic success challenge this view? Not necessarily. China’s rise is relatively recent. And even to this day, it lags the West with respect to technological innovation. Its early history suggests this should not have been the case, however. In Mokyr’s (2016) account, science and technology flourished in China during the rulership of the Tang (618-907 CE) and Song (960-1279 CE) dynasties but subsequently declined and stagnated during the Ming (1368-1644 CE) and Qing (1644-1911/12 CE) dynasties. Thus, the reason Europe had an industrial revolution and China did not, is that in addition to a radical change in culture that allowed scientific inquiry and innovation to thrive, there was no truncation in the trend on occasion of conflict or politics.

It is not suggested that there was no resistance by conservative forces in Europe to such liberalism. What differed in Europe from China and the Islamic world, where science and innovation initially thrived, was that the conditions, environment, politics coupled with the determination of its elite, allowed for liberalism to prevail over conservatism. Europe was also more receptive and adopted new technologies far quicker than China. For instance, owing to the printing press, far more books were published in Europe than in China, where “movable type printing” only took off from 1800 (Mokyr, 2016).

A contemporary case is the contrast in the economic evolution of mainland Chinese cities like Beijing and Shanghai and Hong Kong, which was a British protectorate until 1997. Lately, there has been sustained protests by Hong Kong youths against the increasing exercise of power by the mainland Chinese government over its special administrative region. Clearly chagrined by the prolonged protests, Chinese authorities have happened on a likely culprit: culture. Why do youths in Hong Kong behave differently from those in Beijing or Shanghai? They are educated differently. In mainland China, the young are indoctrinated with patriotic zeal at formative ages, via rote learning. In Hong Kong, the young are deliberately taught to think independently and critically. Thus, mainland Chinese youths are not as likely to challenge the government as their counterparts in Hong Kong.[7]

Malcolm Gladwell devotes a chapter to culture and air transportation safety in his 2008 book “Outliers: The story of success”. Gladwell posits Korean Air had the most plane crashes in the 1990s because of its hierarchical culture: co-pilots had difficulty pointing out errors by their captains because of the airline’s (and broader Korean) culture of deference to elders.[8] A culture of deference is also attributed to the 2013 Asiana 214 plane crash. Analysis of aviation accidents in sixty-eight countries supports the hypothesis that culture plays a role in safety.[9] Enomoto & Geisler (2017) find the higher the GDP per capita and culture of individualism in a country, the lesser the number of plane accidents. Conversely, they also find the higher the number of flights and power distance scores, the higher the number of plane accidents.

Citing Pinker (2018)[10], Spolaore (2019) argues that the cultural thesis of “open science” based on Robert Merton’s scientific virtues of communalism, universalism, disinterestedness, and organised scepticism and “inclusive institutions” for European progress in Mokyr (2016) presupposes that the current era of fast & seamless global communications should see unprecedented levels of progress across the world. Is that the case, though? Not entirely. Because even as global communications are easier and faster than ever, technological progress remains uneven. Put another way, that communications and international collaborations are easier now and yet technological progress remains skewed towards Western nations is perhaps evidence of the robustness of the cultural argument. But what specific aspects of a culture drive economic progress? I survey the literature on the relationship between culture and economic outcomes and explore the role of culture as a factor in Africa’s relative underdevelopment to date.

2.0       Cultural characterisations
Most studies employ cultural characterisations of individualism and collectivism by Hofstede (2001), autonomy and embeddedness by Schwartz (1994), and trust and equality by Inglehart (2000) (see Table 1).[11],[12],[13],[14] Individualism, autonomy, egalitarianism, trust and tolerance have been found to be significant cultural traits for rich countries while embeddedness, hierarchy, power distance, uncertainty avoidance, market orientation, and equality are the dominant cultural dimensions in poor countries (see Table 2).[15]

Table 1: Cultural dimensions
Hofstede (2001) Schwartz (1994) Inglehart et al. (2000)
Individualism/Collectivism Harmony Trust
Power distance Embeddedness Hard work & thrift
Masculinity/Femininity Hierarchy Tolerance
Uncertainty avoidance Mastery Public good provision
Long-term/Short-term orientation Affective autonomy Equality
Intellectual autonomy Market orientation
  Egalitarianism
Source: Schwartz (1994), Inglehart (2000), Hofstede (2001), Gorodnichenko & Roland (2011)

Hofstede defines his five cultural dimensions as follows: Individualism/collectivism is the degree to which individuals are expected to look after themselves or remain integrated within groups, usually around the family. Power distance is the extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally. Masculinity/femininity refers to the distribution of emotional roles between the genders. Uncertainty avoidance is the extent to which a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Long-term/short-term orientation refers to the extent to which a culture programs its members to accept delayed gratification of their material, social and emotional needs.

Table 2: Culture vs. Wealth
Rich Countries Poor Countries
Individualism Embeddedness
Intellectual Autonomy Hierarchy
Affective Autonomy Power Distance
Egalitarianism Uncertainty Avoidance
Trust Market Orientation
Tolerance Equality
Adapted from Gorodnichenko & Roland (2011)

Schwartz’s cultural values and their characteristics (in parentheses) are as follows: Harmony (unity with nature, protecting the environment, world of beauty); Embeddedness/Conservatism (social order, respect for tradition, family security, wisdom); Hierarchy (social power, authority, humility, wealth); Mastery (ambition, success, daring, competence); Affective autonomy (pleasure, exciting life, varied life); Intellectual autonomy (curiosity, broadmindedness, creativity); and Egalitarianism (equality, social justice, freedom, responsibility, honesty).[16],[17],[18] Inglehart’s cultural values of trust, hard work & thrift, tolerance, public good provision, equality, and market orientation are self-descriptive.

3.0       Culture & economic outcomes
Culture affects economic development. A comparison of the results of an experimental Ulitmatum Bargaining Game (UG) among the Machiguenga tribe of the Peruvian Amazon and participants in Los Angeles in America show significant differences in economic decision-making.[19] The experiment especially demonstrates that humans make economic decisions differently based on their values and beliefs. But even as this fact has always been reckoned, there was hitherto a reluctance to consider it as a factor in the explanation of economic phenomena because “explanations will become less clear-cut than they seem to be in the world of economic models.”[20] Cultural economics studies have since been able to successfully use survey data, study of second-generation immigrants, and experiments to overcome this supposed measurement constraint.[21]

Studies show individualist cultures engender higher economic growth relative to collectivist cultures. This is because “of the social status rewards associated with innovation in that culture.”[22] And studies find that this individualism-innovation-growth nexus is robust to the effects of institutions and other growth-related factors. The suggestion is not that collectivist countries do not engender innovation. Rather, it is that the innovation observed in collectivist cultures tend to be incremental and relatively irrelevant over time. Acemoglu & Robinson (2019) put it in the most straightforward way: “It doesn’t mean no innovation and no technological progress, as China’s own experience during the Song dynasty and the Soviet Union’s early success attest to.”[23] The consensus view is that individualistic societies are likely to maintain their technological leadership and thus likely to remain richer.

Table 3: Hofstede (2001) country index scores (ranks) for select countries
Country Power Distance Uncertainty Avoidance Individualism

/Collectivism

United States 40 (38) 46 (43) 91 (1)
Germany 35 (42-44) 65 (29) 67 (15)
Australia 36 (41) 51 (37) 90 (2)
UK 35 (42-44) 35 (47-48) 89 (3)
South Africa 49 (35-36) 49 (39-40) 65 (16)
East Africa 64 (21-23) 52 (36) 27 (33-35)
West Africa 77 (10-11) 54 (34) 20 (39-41)
Source: Hofstede (2001)

Culture also plays a role in financial development, which is germane to economic growth.[24] Specifically, a strong correlation is found between uncertainty avoidance and the financial development of a country. That is, countries with high uncertainty avoidance or a low appetite for risk, tend to have relatively less developed financial systems (proxied by private sector credit extension and stock market capitalization). Incidentally, they also tend to have relatively lower levels of trust. Unsurprisingly, much of the developed world is characterised by a high level of trust. Generalized trust, where the goal of trust is towards the society, engenders economic efficiency while personalised trust, where the goal of trust is towards a small group (e.g., family, etc.), weighs on economic efficiency. Put another way, as most economic activities require dealing with strangers, countries with a generalized trust culture tend to be relatively more prosperous.

4.0       Culture & African development
A high level of trust is a cultural trait associated with rich countries. A low level of trust has been observed among African populations.[25],[26] The historical origins of mistrust in Africa has been traced to the slave trade. “Individuals whose ancestors were heavily raided during the slave trade today exhibit less trust in neighbours, relatives, and their local government.”[27] The heterogeneity of African populations has also been attributed for its relatively lower level of trust. This is because “heterogeneity increases the likelihood of mis-cordination and distrust, reducing cooperation and disrupting the socioeconomic order.”[28] Little wonder, cultural affinities matter more than national institutions in Africa.[29] When ethnic groups partitioned across different African countries were compared in one study, it was found that “there were no systematic differences in economic performance within split ethnicities whose partitions following independence would come to be subject to different national institutions.”[30]

And even while colonialist choices still underpin the institutional framework of most African countries, they are not of the kind to bring about a positive change in values.[31] This is not the case in general. A study shows that these institutional choices were correlated with the mortality rate of the European colonialists.[32] Where the colonialists faced high mortality rates, as they did in most of Africa, they set up extractive institutions (e.g. slave trade). Where they did not, like the US, Australia and New Zealand, they settled and set up institutions that enhanced growth factors like the rule of law and thus encouraged investments.

For instance, the British colonialist divide-and-rule strategy has been found to be detrimental to state-building in its former African colonies.[33] Unsurprisingly, former British African colonies place greater store in their ethnicity than their European-imposed national identity. There are some nuances in this regard, however. In areas close to capital cities, where incidentally European colonialists largely concentrated their developmental efforts, there is evidence of state capacity. But in areas far from capital cities, where state capacity is literally non-existent, ethnic insitutions prevail and hence explain why the economic performance of partitioned ethnicities are similar despite being under different national institutional arrangements.

For instance, using light density at night as a proxy for economic activity, one study finds a significant relationship between pre-colonial ethnic institutions (stateless ethnicities, petty chiefdoms, paramount chiefdoms, and pre-colonial states) and regional development in Africa.[34] In other words, kingdoms, empires, chiefdoms and the like, that were in place before European colonisation continue to be relevant to African development.[35] And the rigidities of these pre-colonial ethnic-based political centralizations explain the incapacity of some African states to exercise full authority over property rights, tax collections and monopoly of violence to this day. Clearly, for better or worse, African ethnic institutions are a factor in its economic development. In light of these realities, ethnic institutions could very well be formalised to fill these gaps in state capacity.

The case of Botswana suggests colonialism is not an excuse, however.[36],[37],[38] Parsons & Robinson (2004) show how the majority Tswana tribe of Botswana had a relatively egalitarian and accommodative political structure before the arrival of colonialists. Whereas tribal loyalties was a huge obstacle to state formation in many other African jurisdictions under colonialsim, and are adjudged to still be the case presently, the relative homogeneity of the Tswana’s pre-colonial political institutions in Botswana, which already integrated non-Tswana tribes almost seamlessly, made the transtion to a unitary state almost a natural one.

5.0       Changing culture
If culture is a factor in Africa’s relative underdevelopment thus far, why not reform? It is a herculean task. Cultural practices endure precisely because they worked towards a desirable purpose of the majority of a population during a prior period. For instance, tight kinship and the moral systems around it were useful for agricultural production, which typically is the early stage of a country’s development. But is such a system suited to the current “modern economic regime that relies on increased interactions with strangers”?[39] While loose kinship societies currently populate the global technology frontier, it is not suggested that tight kinship societies give up their norms to achieve similar feats. Instead, it is the institutions around the culture that need to be changed or reformed to become fit-for-purpose for the current modern era. Intercultural exchange can also be a mechanism through which sub-optimal norms are updated or discarded. Cultural entrepreneurs have also been found to be effective influencers; albeit with varied success.

5.1       Policy & Institutions
“A modern economy is characterized by a rapid growth in non-parental transmission, and in fact such mechanisms of intergenerational transmission are one of the hallmarks of modernity” (Mokyr, 2016). Policy reforms can be used to effect cultural change.[40],[41] It is a fact that “exposure to different institutions/norms during crucial developmental-ages significantly changes individuals’ behaviour.”[42] Institutions can be used to change culture.[43] And it is weak institutions that allow bad cultural practices to persist. Because even when a cultural practice is bad, in the face of strong countervailing formal institutions, it can be discouraged to extinction. In other words, “culture persists in certain institutional environments and not others.” Culture and institutions are complementary and the roles they play in wealth creation depends on the environment and context.[44] Still, even as culture may be amenable to institutional changes, the lead time to the desired outcome could be considerable. In fact, it “can take several generations to reach a new steady state [even] after institutions have changed.”[45]

One study actually shows that it is in the absence of institutions that culture matters, but that once institutions are in place, culture is not so relevant.[46] The study further argues that “economic freedom is relatively more important for growth than culture” albeit the effects of culture on growth are not totally dismissed. It could be inferred that institutions could be used to change culture. And when strong institutions are in place, sub-optimal cultural practices and the systems that sustain them would have little room for influence or power.

“Culture changes in response to a new environment”.[47] Culture is hard to change, however. The reasons why this is the case are as follows.[48] Firstly, parental transmission, through which a great deal of culture is passed from generation to generation, is hard to shake off; that is, even in the face of evidence of sub-optimality. Secondly, entrenched organisations like the state and religious institutions, which garner economic benefits, power or influence from certain values and beliefs, are typically reluctant to give up their power. Thirdly, some growth-hindering cultural practices engender population growth and thus the spread of these values and beliefs.

With these entrenchments, how then can culture be successfully reformed? Culture consists of two major components: inherited values, a historical component, and social interactions, a contemporaneous component.[49] As inherited values are transmitted from parents, they are hard to change. Social interactions, however, are malleable to change, and are thus channels through which culture could be changed, updated or reformed. Thus, interactions between accomplished Africans in the diaspora, who could be encouraged to return home via incentives, and their compatriots on the continent could be effective. Put in positions of authority in business and government, they could effect cultural change. Multinational companies already do this but with mixed results.[50] For instance, a 2015 survey by Russell Reynolds Associates on senior African executives in the diaspora shows that while senior African talent no longer view returning home to work as a failure, the willingness to do so varies by country.[51]

Also, “education is an effective way of inculcating the right sort of beliefs among citizens” (Acemoglu & Robinson, 2019). Put another way, “education is the most powerful factor in making men modern”.[52] Political leaders could be persuaded to the cause of modernity through education; which some top American and European universities already facilitate. For younger citizens, school curricula could be modified to promote critical thinking over rote learning. For those outside of the school system, public advocacy on specific negative cultural practices has been found to work; especially when backed by the international community. In tandem with advocacy, legal measures could also be put in place in strengthen deterrence. For instance, female genital mutilation has been criminalised in many African countries. And just recently in South Africa, spanking a child was declared unconstitutional.[53] These are just few examples. More fundamentally, policy and institutions could be used to countervail cultural practices and entrenchments inimical to prosperity.

5.2       Intercultural exchange
“Intergenerational transmission of human traits, particularly culturally transmitted traits, has led to divergence between populations over the course of history” which in turn, has “introduced barriers to the diffusion of technologies across societies.”[54] Knowledge and experiences are easily and often first shared between peoples that are closely related in culture, language, and habits.[55] In other words, the success of a developed country is closely related to the practices of its ancestral population or its cultural proximity to a developed one. As “historical and cultural variables affect the propensity of the citizens of a country to trust the citizens of another country”, “perceptions rooted in culture are important determinants of economic exchange.”[56] Still, while ancestry matters, it is not insurmountable for disadvantaged populations if the barriers to “communication and interaction across cultures and societies” are addressed. Still, the intercultural exchange required to overcome these disadvantages must be deliberate and focused.

Does that then mean contemporary development policies are efforts in futility? Spolaore & Wacziarg (2013) argue they are not. An understanding of a people’s history and culture allows for the identification of the barriers to the spread of knowledge and innovation they create and thus allow solutions to be fit-for-purpose and effective. And there are examples of these. For instance, “Japan is geographically, historically and genetically distant from the European innovators, but it got the Industrial Revolution relatively early” (Spolaore & Wacziarg, 2013). And because of Japan’s success, South Korea and later other Asian nations were able to also climb the economic ladder. (Japan “became a cultural beachead”.) Hong Kong was similarly a “beachead” through which modernity spread to China.[58] “Southern Chinese cities or special economic zones developed largely as the result of having generalized what had worked in Hong Kong” (Spolaore & Wacziarg, 2013). This view underpins how special economic zones are today used to accelerate economic development around the world.

In the current era of globalisation and high-speed innovation, these hitherto high barriers are easier to scale. “There is still room for development policies to reduce barrier effects and to accelerate the spread of ideas and innovations across populations, especially in the context of an increasingly globalised world where barriers to the diffusion of development can be brought down more rapidly” (Spolaore & Wacziarg, 2013). There is evidence technology adoption is faster nowadays. Still, while “adoption lags have converged across countries over the last 200 years”, “penetration rates have diverged.”[59] This is what explains why despite the ubiquity of new technologies, the income gap between poor and rich countries remains wide.

5.3       Cultural entrepreneurship
Being as cultural change largely consists of social learning and persuasion, cultural entrepreneurs, like today’s celebrities and social media influencers, can be effective cultural change agents.[60] According to Mokyr (2016), “cultural authorities [or celebrities] often have no special expertise and yet somehow become the source of authority or focal points in cultural choices.” Mokyr further argues that when knowledge is effective (that is, when techniques or predictions based on this knowledge work well), beliefs can change quickly: once people see an airplane fly, they will accept the propositional belief that objects heavier than air can actually defeat gravity”.

6.0       Conclusion
Clearly, culture matters for development. And it is one of the factors that underpin the relative underdevelopment of African countries. Studies show individualist cultures engender higher economic growth relative to collectivist cultures. A high level of trust is a cultural trait associated with rich countries. Incidentally, African countries are characterised by low trust owing to slavery and colonialism. Institutions, intercultural exchange and cultural entrepreneurship are means by which the negative aspects of sub-optimal cultural practices could be mitigated, reformed or eliminated.

I propose an action-plan that includes critical-thinking in school curricula, laws against negative cultural practices, incentivisation of the arts to promote progressive values, special economic zones in partnership with successful countries, allocation of senior government positions to citizens in the diaspora, and national orientation programmes to promote proven innovation-enhancing values. They are discussed below.

Critical-thinking school curricula for early education
Rote-learning remains the dominant teaching method in many African countries. To become innovation-focused, young Africans need to acquire critical thinking skills early on. It is not as difficult as it may seem. Affluent and middle-class Africans already differentiate their kids by sending them to foreign-affilliated “international” schools to learn these critical skills. While it would be a herculean task to re-orient local teachers towards this type of pedagogy, there are already affordable tech-based solutions. Pre-recorded classes by teachers already skilled in critical thinking pedagogical methods abroad could be played to local students. Parents with means, could also stream or download such educational materials for their wards via the internet.

Promulgation and enforcement of laws against negative cultural practices
Corporal punishment is unconstitutional in South Africa. It could be so everywhere else on the continent. Female genital mutilation is also increasingly illegal across Africa. These are few examples of how laws could be used to change negative cultural practices.

Progressive and liberalist approach to censorship of the arts
As celebrities – artists, actors, etc. – have a huge influence on African youths, there should be a deliberate effort by African governments to faciliate collaboration between local and foreign celebrities with a view to achieving intercultural exchanges. Local ones could also be incentivised and encouraged to espouse values that engender innovation in their works. Governments can signal this intent by how they approve works of art – music, movies, etc – for airing to the public.

Special economic zones in partnership with successful countries
As evidence shows special economic zones have been successfully used to transfer knowledge and technology from developed countries to developing ones, in Asian countries, no less, African countries could easily find in them a quick and effective way of not only acquiring knowledge and technology but desirable work cultures as well.

Allocation of government positions to Africans in the diaspora by statute
There are many successful Africans in the diaspora. To succeed, they had to attune themselves to the cultures of the foreign lands they found themselves. Incidentally, they are also best positioned to bring about cultural change in their home countries. Already familiar with their home cultures, they are likely to be more persuasive in their transmission of their newly acquired innovation-enhancing norms and habits. To be sure, they do not always succeed in doing so. Still, their understanding of “both worlds” makes them compelling advocates of new ways.

National orientation programmes to promote proven innovation-enhancing values
In China, patriotic zeal is instilled in citizens at a very early age in schools, at work, and so on. Patriotic songs and messages are aired from speakers on the streets for the continued indoctrination of citizens as they go about their daily businesses. It is not suggested that such extremes should be applied in African countries. Thankfully, there are more creative and effective ways nowadays. For instance, Burna Boy, a popular African music artiste, recently released a song about Aliko Dangote, Africa’s richest man. In the song, the musician uses the example of Mr Dangote, whose reputation for hard work is well-known, to espouse the virtue of hard work. In a melodious tune now sang by millions, Mr Burna Boy wonders why anyone would be lazy if Africa’s richest man continues to work hard than most people. This is a striking example of the many creative ways that cultural change could be facilitated.

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macroafricaintel | Democracy & Development

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Democracy engenders growth
A recent paper by Acemoglu et al. in the top-rated Journal of Political Economy shows evidence that “Democracy does cause growth.” It does this by attracting more investment, facilitating increased educational attainment, spurring economic reforms, decreasing social restiveness and thus the security of lives and property, and the provision of public services. Democracy also engenders economic growth by making opportunities available to most of the people as opposed to a powerful few.

The study also finds that the beneficial effects of democracy on economic growth are robust across developing and advanced economies. In other words, they do not find that democracy weighs on the growth of developing economies; as argued by a substantial part of the extant literature. When a country adopts a democratic form of government, the authors assert, its GDP per capita rises by at least 20 percent over the subsequent 30 years; albeit they find this effect to be easily attained in countries with already high levels of educational attainment.

The study also finds that democracy is contagious. When democracy takes hold in one country, its neighbours tend to become democractic as well. In other words, “the probability of a country transitioning to democracy or nondemocracy is strongly correlated with the same transition occurring in other countries in the same region.” Even so, country-specific values are significant factors underpinning the evolution of the democratization process.

Reduce the cost of democracy
There is a difference between an electoral democracy and a liberal democracy. The latter is ideal but the former is what is prevalent. Following from this, it could be argued that Africa cannot yet boast of a country where true democracy thrives. That is, one based on the classical Abraham Lincoln definition of “government of the people, by the people, and for the people.” Botswana is probably an exception, though. Little wonder, there are increasing complaints in mostly poor African countries about the effectiveness and costs of “democracy”.

The so-called “dividends of democracy” remain elusive to many and elected officials are rarely held accountable. Besides, political aspiration is largely exclusionary due to high barriers to entry related to financial capacity. Political parties charge exorbitant fees for registration and other party-related financing. Campaign costs are also prohibitive. There are similarly huge expenses borne by politicians for dishing out patronage; which incidentally they tend to make sure to recoup with “interest” when they eventually win. Bottomline, you could not aspire to political office if you were not rich or sponsored by the rich.

Additionally, parliaments that are supposed to check the potential excesses of executives, tend to end up being little more than rubber stamps; especially when controlled by ruling parties. Thus, there is an urgent need for political reforms in many poor African “democracies.” Good thing then that with information and communications technology (ICT) increasingly spurring more direct participation of the general public in governance matters, there is an opportunity to make the necessary changes with relative ease.

A people’s assembly
I recommend a truly representative and egalitarian unicameral (“People’s Assembly”) legislature. Firstly, aspiring legislators should all be independent candidates and not belong to a political party. That way, no party controls the legislature. Registration and other formalities for election into the legislature should be free or for pittance and must be via the electoral body. Thus, no party primaries. And while independent candidates would still be qualified and eligible to participate in elections to executive positions (president, governor, premier, etc.), political parties would be the primary vehicle for such positions. If the rational assumption, in light of history thus far, that political parties are likely already captured by the rich elite is made, an egalitarian and truly representative People’s Assembly would be an ideal counterbalance.

Hofstede’s Culture’s Consequences: A review in the Nigerian context (1)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

The purpose of Geert Hofstede’s Culture’s Consequences: Comparing Values, Behaviours, Institutions and Organisations Across Nations is an ideal starting point. “A better understanding of invisible cultural differences is one of the main contributions the social sciences can make to practical policy makers in governments, organisations, and institutions – and to ordinary citizens.” I extract some of the expositions in the book to highlight certain cultural practices and behaviours in Nigeria, which to the ignorant, are accepted as “wisdoms.” Unfortunately, a lot of those who eventually see the “light” – many do not, only realise the false or flawed logic behind these “wisdoms” when they are aged, too late of course, sapped of strength, with little or no initiative left for enterprise. But for these suboptimal norms, we would probably be a nation of groundbreaking innovators and entrepreneurs of global reckoning. Yes, we do have some of those. But where are they? Most are in saner climes.

Shame vs guilt
Nigeria has unity in many spheres than most people realise. We have a commonality in at least one instance: all our ethnic groups have shame cultures. Ever wonder why most Nigerians make decisions around the frame of reference of “what will people say?” Shame cultures do not engender innovation. Shame cultures are collectivist while guilt cultures are individualist. Most of today’s advanced economies have individualist cultures while some of the poorest economies are collectivist. The motivation to do what is right in guilt cultures is intrinsic while that for shame cultures is extrinsic. I quote from several parts of the relevant sections of Hofstede’s book to establish the theory.

“US anthropologist Ruth Benedict (1946/1974) stressed the distinction between cultures that rely heavily on shame and those that rely heavily on guilt…True shame cultures rely on external sanctions for good behaviour, not, as true guilt cultures do, on an internalized conviction of sin. Shame requires an audience or at least a man’s fantasy of an audience. Guilt does not. In a nation where honor means living up to one’s own picture of oneself, a man may suffer from guilt though no man knows of his misdeed”

“The child in a collectivist society is seldom alone, either during the day or at night. In an individualist society, such a lack of privacy would be highly abnormal. In most collectivist cultures, direct confrontation of another person is considered rude and undesirable. The word “no” is seldom used because saying no is a confrontation. In individualist cultures, on the other hand, speaking one’s mind is a virtue. Telling the truth about how one feels is seen as a sincere and honest person. Confrontation can be salutary; a clash of opinions is believed to lead to a higher truth.”

“A child who repeatedly voices opinions that deviate from what is collectively felt is considered to have a bad character. In the individualist family, in contrast, children are expected and encouraged to develop opinions of their own, and a child who always only reflects the opinions of others is considered to have a weak character. Family life in collectivist societies can be oppressive and stultifying, with no escape for those suffering abuse, especially girls. Members of the collectivist family are partially kept in order by the threat of shame.”

“A child in individualist society who infringes upon a rule learns to feel guilty, ridden by an individually developed conscience that functions as a private inner pilot. Collectivist societies, in contrast, are shame cultures: Not only the culprit him- or herself but also his or her in-group mates are made to feel ashamed when a misdeed is committed. Shame is social in nature, whereas guilt is individual: whether a person feels shame or not depends on whether the infringement has become known by others. This becoming known is the source of the shame, more so than the infringement itself.”

Be your own audience
To feel shame requires that your actions and thinking are against the background of an audience; real or imagined. If your sense of purpose is otherwise, based on something genuine, like your own satisfaction, shame is an emotion you cannot feel; that is, with respect to failure, etc. Incidentally, it is also those with such emotional resilience and grit that succeed in our shame-based climes.

The reason most of our compatriots do not hesitate to roll up their sleeves when abroad is because suddenly there is no audience to impress or be wary of. It is shame that stops a lot of ideally industrious young Nigerians from letting go of their false pride and getting down to work. The fear of standing out also prevents a lot of young Nigerians from pulling above their weight. The consequence is that the poor remain poor and the wealthy remain wealthy or wealthier. For instance, the rich send their wards to “international schools” and thereafter abroad for further studies. Add to that some work experience in the “temperates”, they become well-placed to maintain the lofty positions of their parents.

Ever notice how the rich are stern with the children of the poor when they violate a cultural norm and laugh off the same “infractions” by their own kids? Much of what we call culture are mechanisms for discrimination and exclusion. Take another issue: corruption. It is retractable because our cultures tolerate some level of corruption. There are proverbs in our various languages with meanings like “live and let live”, “it is where we work we will eat from”, etc. Corruption is not considered a shameful act in most Nigerian cultures. Who are largely the practitioners and major beneficiaries of corruption in Nigeria? The rich. It is a vicious cycle.

e go learn” & “o ma gbon” fallacies
You would hear custodians of these shame cultures make remarks like “e go learn”, “o ma gbon”, etc. (They mean “he will learn”, “he will become wise”.) In the Yoruba culture (I am Yoruba), for instance, early marriage is encouraged, living by yourself (“on dagbe”) is discouraged, and so on. They are not the “wisdoms” they are oft-presented as. These are norms, that put together with others, ensure the tribe’s cultural institutions of rewards and sanctions, function effectively. They hinder social mobility. Put another way, they engender social statism. If you are not well-to-do and you marry early, with responsibilities hitting you right, left and centre, you cannot garner enough savings in time to change your circumstances for the better. With little or no privacy, being perennially in the company of others from birth, there is little chance of the kind of introspection and contemplation required to better your lot.

So when you hear these culture custodians make such remarks like “e go learn”, “a ma ko”, “o ma gbon”, etc., what they really mean, logically at least, is that you would learn to be mediocre, you would acculturate to aim low. Put simply, you will learn to know your place. From the slave trade, our forever potholed roads, power blackouts on end, to the continued pilferage of our commonwealth by the elite with impunity, the “e go learn”, “a ma ko”, “o ma gbon” pseudo-sages have little to show for their self-acclaimed wisdom. They do know one thing, though. Those who refuse to “gbon” (learn), the mavericks, the sometimes “olori olowos” are precisely destined as such because of their consistent defiance of convention. Flawed conservatism is not wisdom. Needless to say, our culture is holding us back.

macroafricaintel | Mokyr’s A Culture of Growth: A review in the African context (2)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Convention is fluid
Remember when if you wore sneakers with a traditional attire, you would likely be thought a misfit? But today, it is consider quite cool, isn’t it? All it took was a few celebrities to wear the abnormal combination. This second example would resonate with Muslims. Some Muslims wear trousers that stop just before the ankle as a religious practice. It wasn’t considered a ‘cool’ thing to do. Have you noticed, however, that supposedly ‘cool’ suits nowadays come with trousers that stop just before the ankle? Celebrities are cultural entrepreneurs. They are cultural change agents. It is not always the case that they seek to change culture deliberately. For some, it is precisely their bold actions that throw them into the limelight. Others simply rode on popular culture and acquired fame in the process and thereafter are able to introduce new trends of their own. It is also the case that through them, people can be dissuaded from negative cultural practices.

“What is it precisely that cultural entrepreneurs do? Mokyr posits “they are persons who become sufficiently influential to change the cultural menus of enough people and who persuade many of them to adopt the cultural variants they are proposing.” To be sure, not all cultural entrepreneurs succeed. Those who do are “individuals who successfully contested and overthrew existing authorities in a specific area of culture and created a competing variant”. Two hugely successful cultural entrepeneurs of their time are Isaac Newton and Francis Bacon, whose legacies endure to this day. More relatively recent examples are prominent economist John Maynard Keynes and American civil rights leader Martin Luther King Jr.

If these examples do not resonate with you, maybe this would: an Oprah Winfrey qualifies as one. Put simply: “influential individuals affect the beliefs and preferences of others”. They are probably also the most effective channel through which culture can be changed today. Who are our celebrities? Are the beliefs they espouse progressive or retrogressive? Are the contents of our arts ones that spur innovation and new thinking or the entrenchment of old beliefs? Institutions can be created or remodeled to tune our cultural output towards progressive goals. For instance, what are the criteria by which our censor boards approve art, movies, music, etc.?

A warning. Cultural entrepreneurship is a hugely risk affair. In Europe, Mokyr recounts, “new people challenged the conventional wisdom in every area of knowledge and thought. To be sure, a variety of conservative bodies made serious attempts to suppress innovators and some of the most innovative cultural entrepreneurs paid with their lives.” But while during the European Enlightenment, “fragmentation, footlooseness, and the proliferation of printing presses meant that it became increasingly difficult for politically powerful incumbents to suppress subversive and heretic new beliefs generated by cultural entrepeneurs,” with the internet and technology, it is much easier today to be one with not as much risk or effort.

Modern man vs traditional man
I digress from Mokyr (2016) a little bit. Who is a modern man? And how does he defer from the traditional man. To the ignorant, the instinctive definition veers towards the ethnic, tribalistic or racist. It is no such thing. Geert Hofstede’s (2001) Culture’s Consequences: Comparing Values, Behaviours, Institutions, and Organizations Across Nations quotes now late Harry Triandis’ (1971) Some psychological dimensions of modernization, a paper he presented at the 17th Congress of Applied Psychology in Liege, Belgium on the differences between the two as follows:

A modern man “is open to new experiences; relatively independent of parental authority; concerned with time, planning, willing to defer gratification; he feels that man can be master over nature, and that he controls the reinforcements he receives from his environment; he believes in determinism and science; he has a wide, cosmopolitan perspective, he uses broad in-groups; he competes with standards of excellence, and he is optimistic about controlling his environment.”

The traditional man, however,has narrow in-groups, looks at the world with suspicion, believes that good is limited and one obtains a share of it by chance or pleasing the gods; he identifies with his parents and receives direction from them; he considers planning a waste of time, and does not defer gratification; he feels at the mercy of obscure environmental factors, and is prone to mysticism; he sees interpersonal relations as an end, rarely as means to an end; he does not believe that he can control his environment but rather sees himself under the influence of external, mystical powers.”

Modernise your philosophy of life
Being a modern man does not require that you give up your religion or your traditions. Instead, it is underpinned by the philosophy that there is a rational explanation for everything. In applying this ethos, you approach problems objectively, seek new and better solutions, and continually seek to improve your lot. The traditional man, however, seeks irrational and mystical explanations, and procures the services of its dubious practitioners when in doubt. The outcome is very well what underpins our problems as a country. Whether it is perennial traffic in a busy Nigerian city, power failure on end, lack of reliable potable water supply, and so on, the “traditional man” outlook of most of our compatriots is why we live relatively miserable lives. So, my questions to you are thus: Which of a modern or traditional man as described above is better? And which one are you? Become better. Better still, become best.

macroafricaintel | Insights & views on culture (1): Acemoglu & Robinson’s The Narrow Corridor

By Rafiq Raji, PhD

The Narrow Corridor: States, Societies and the Fate of Liberty”, the latest book by Daron Acemoglu, a professor of economics at MIT, and James Robinson, a professor at the Harris School for Public Policy at the University of Chicago, is a goldmine of insights. What is state capacity? It is the ability of a state to achieve its objectives. That simple. Such simplicity is the recurring theme of the book. The suggestion is not that the authors avoid the complexities of the subject they explore, but rather that they have sufficient mastery of it to put their ideas forward in the most straightforward manner.

Their main idea is that for liberty to thrive, there must be a balance between the state and society. And they impressively show how a lot of the governance problems around the world stem from an imbalance between the two. The objectives of a state include law enforcement, conflict resolution, economic regulation, provision of infrastructure and public services. A state has capacity when it is able to achieve these objectives. When a state lacks capacity, however, society dominates. The dominance of either the state or society stifles liberty, which is the condition that underpins innovation and prosperity.

Society is culture; that is, “customs, traditions, rituals and patterns of acceptable and expected behaviour that have evolved over generations.” When culture dominates the governance of people’s lives, the influential custodians tend to get a better deal than the rest of society. And not until there is a state with capacity to balance the scales, culture becomes a cage that the elite beneficiaries use to stifle the progress of the rest.

Red queen
Thus, as society predates the state, “it is [the] state that creates liberty.” To sustain liberty, however, the state and society need to continually compete with each other, with “neither getting the upper hand.” The authors call this continued balanced competition between the state and society a “Red Queen” effect. And this is true in reality, isn’t it? Countries with state capacity and strong civil societies are the ones Africans are willing to brave the dangers of the seas to reach.

“Societal mobilization” or “the involvement of society at large (in particular non-elites) in politics” take the forms of “revolts, protests, petitons, and general pressure on elites via associations or the media”. It could also be via participation in elections to elect or be elected. A society’s power rests on its ability to “impose [its] wishes on major social and political decisions” through these means. When the state is too powerful and society is not able to exercise its power, liberty is similarly stifled.

The edge
Since state-building is essentially a countervailing force to cultural hegemony, “would-be state builders are more likely to succeed and emasculate the norms meant to restrain them if they have an ‘edge’.” That is, “something special, making it possible for them to overcome the barriers in their way.” This “edge” could be religious, organisational, technological or personality-related.

An African example of one such state-builder, whose edge was organisational, is King Shaka of Zululand in what is today’s KwaZulu-Natal province of South Africa. The Zulu’s dominance in today’s South Africa is a testimony to Shaka’s state-building legacy. But for Shaka to succeed, he “had to break parts of the cage of norms” in Zululand, especially “kin relations and supernatural beliefs, in order to weaken sources of competing power.”

“Restrictions based on norms, traditions and customs dull economic incentives and opportunities, and need to be loosened for economic growth to flourish.” This is because “innovation needs creativity and creativity needs liberty.” That is, individuals should be able to act and go about their affairs without fear and experiment with ideas, whether they are pleasant to others or not. Put another way, “prosperity and economic growth originate” from “incentives for people to invest, experiment, and innovate.”

A state is required to bring all these about. In the absence of one, norms or culture prop up their influential custodians at the expense of the rest. Because like the authors put it, “you need opportunities to be widely and fairly distributed in society, so that whoever has a good idea for an innovation or valuable investment gets a chance to carry it out.” Thus, “liberty in the economic domain necessitates the leveling of the playing field and the lifting of these restrictions.” Social mobility and prosperity for all would be elusive otherwise.

macroafricaintel | Mokyr’s A Culture of Growth: A review in the African context (1)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji, @macroafrica

In A Culture of Growth: The origins of the modern economy, Joel Mokyr, a professor of economics and history at Northwestern University in America, argues modern economic growth or “the Great Enrichment” or “the Great Divergence” emanated from a deliberate and revolutionary change in European beliefs, values and preferences. A radical change in culture. That change, “the European Enlightenment” or “The Enlightenment”, was incidentally propelled by just a few people. European elites decided to change the ways they saw the world. The result? Unprecedented prosperity that endures to this day. To make progress, a culture must encourage openness, progressivism, pluralism and competition.

Attitude & Aptitude
In the African context, especially as we continue to flounder economically, a key lesson is that the change that would alter the course of our history for the better and engender wealth creation would only be brought about when our elites decide to change their ways. But how can they do that in the current technological age with the West already so far ahead? To answer this question, it would certainly help to know how “in the two centuries between Columbus and Newton, European elite culture underwent radical intellectual change” that led to “the Enlightenment, the Industrial Revolution and the rise of useful knowledge as the main engine of economic [growth].”

My rebuttal against the European triumphalism tag that is often pinned on those who argue culture underpins the West’s economic success is that of change. There was a marked change in European culture. In other words, an elite looked at its ways and made a decision to change them with the view to achieving sustainable prosperity. In other words, they gave up their growth-inhibiting inherited values and created new ones. That is a human and universal phenonemon unrelated to race or heritage. And it is a change that any group of human beings can decide to make.

Evidence of the universality of this change can be seen in the similar success of other countries or regions of the world who decided to adopt similar principles with varied results. Today, we all know the earth is round-shaped. There was a time when those who thought so were publicly executed for defying dogma. How many more “the earth is flat” fallacious beliefs underpin our actions and approaches to life? Finding out the earth is round instead of flat is not what matters most. What does, is the deliberate questioning of beliefs and dogma with the singular purpose of discovering the truth. That deliberate and systematic curiosity is essentially what the Enlightenment was all about.

“Religious beliefs and metaphysical attitudes condition a society’s willingness to investigate the secrets of nature [and] alter its physical environment irreversibly”. Put in the African context, our religious beliefs and metaphysical attitudes weigh a great deal on our ability to innovate for economic success. When the Europeans decided to challenge these beliefs, they discovered truths that led to the development of the steam engine, aeroplane, and many more innovations that make us masters of our world today. Unsurprisingly, those who refused to be similarly irreverent are also some of the poorest today. After all, technological innovation, which underpins economic prosperity, is “a consequence of human willingness to investigate, manipulate, and exploit natural phenomena and regularities”. To a great extent, the openness of the West to new and foreign ideas, irrespective of its source, underpins its continued technological leadership.

“Vested interests of incumbents protecting the rents generated by status quo techniques and fear of the unknown and novel create strong incentives to resist innovation.” “What changed history was that in Europe, over the long term, the innovators defeated conservatism. This did not happen anywhere else.” Why? “Political fragmentation, coupled with an intellectual and cultural unity, an integrated market for ideas, allowed Europe to benefit from the obvious economies of scale associated with intellectual activity.”

Irreverence is key to progress
“The most direct link from culture and beliefs to technology runs through religion.” We, Africans, are a very religious people. We are also a very poor people. No one is suggesting we give up religion or tradition. But we must be ready to question our beliefs. And do not seek those answers from the clergy or elders in whose interest it is to jealously guard the advantages or “rents” religion or tradition offers them. Question everything. Question our traditions. Question our culture. Find your own answers. As a guide, you should ask whether a cultural or religious value or norm is backward-looking or forward-looking. The latter is the one that engenders progress and creates longlasting prosperity.

Be unconventional
How do you change a culture? Mokyr proceeds to answer this question by quoting George Bernard Shaw’s Maxim 124 in his “Maxims for Revolutionists”: “The reasonable man adapts himself to the world: the unreasonble one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” You need unreasonable men and women to change a culture towards progress. Thus, it is no coincidence that it is the unreasonable and irreverent that create new wealth.