Know and Respect: Human Progress in Africa
Dr FD Amonya
Keynote Address Imperial Business School
Part I: The Cardinals: Knowing and Respect
We’re here to talk business. But we’re looking at a human ecosystem. Let’s agree, to draw money from that system, ask how the system benefits. So, where is Africa? Where’s Africa on its trail of human progress? There’re two cardinals of human progress - knowing and respect. The human ecosystem must know itself and the broader world. And the human ecosystem must respect itself and the broader world. You might ask, where’s survival? It comes from knowing.
At independence, Africa was keen on knowing. That collapsed in the post-independence turmoil – typically 1970s. Life became grab-and-run. The other cardinal (respect) also collapsed. We’ve been trying to recover since the 1980s. We needed a close dialogue between the state and society. However, Bretton Woods thought we needed to minimise the state and partially replace it with the market. It was called SAP [structural adjustment programme]. That failed and a few countries are attempting to undo the SAP reforms.
So, where’s the market? It’s confined to pockets of the ecosystem. That’s where we find the so-called capital markets. The broader ecosystem has been attempting to pool their small monies (credit unions). These offer the most sustainable prospects for Africa.
Part II: Business in Africa: Policy Science and the Devil in Experience
Experience is evil. It goes around telling everyone what it saw. But what it saw may not be what happened. Yet, experience peddles that what it saw is what happened. And because it saw it happen, experience knows what will happen next, elsewhere. That’s evil. But we can work with what experience saw.
#1 The Policy Triple
Public policy resides in the interaction of the state, market, and society. Call it Bacon-Weber triple. Francis Bacon crystallised the state as a structure anchored on science. Max Weber crystallised society as a duality of monopoly over violence and protection of property rights. The market emerged as a means of ensuring Weberian cardinals. But the triple is individual composite and adaptive. That’s our main challenge.
#2 Collapse of the Newtonian Frame
Common scholarly endeavours draw on the Newtonian frame (F = ma). That’s true of economics, law, engineering…name it. No escape, finance is in that wagon. But wait. All the humanity-leaning disciplines are struggling. Newton would have told them to abandon his frame.[1] He acknowledged being able to calculate the movement of the heavenly bodies but not the ‘madness’ of people. But why? The Newtonian frame collapses beyond two bodies. How many do we have in policy? The order is 10^7 (the tens of millions with phones on the palm expressing opinions on policy). So, with the Newtonian frame out, what do we have left? Our main resort is complexity science. And we will look at it. First, two centuries after Newton, Poincare and collaborators peered into the Newtonian frame at the neighbourhood – what we call perturbation theory. Let’s look at it.
#3 Perturbation Science
Perturbation theory allows us to analyse policy in the temporal neighbourhood of our comfort zone – when we are close to spaces we understand.[2] We can then view the perturbed situation as a Taylor series expansion of the perturbation parameter. Let’s bring all that to life. Take infrastructure policy. Look at Uganda in the 1990s, Ghana in the early 2000s, or Rwanda over the past decade. These are policy situations investors would have considered appealing. Why? There was some predictability. Take one of the three, Ghana now. It’s reeling in debt. How will it emerge from debt? Will it be as predictable, as appealing? These are questions that your cohort must find interesting. Now, wear the perturbation lens. Immediately, we think of higher order effects. The comfort zone of early 2000s hid strands of policy that would blow out in a perturbation.
Recall, Ghana invested heavily in infrastructure. Infrastructure investment in Africa premises on social return of typically circa 30 percent. If so, why would this [fading] monetary tightening wreck the economy? No, it shouldn’t. Instead, we must question the analysis of the investment. These situations invoke perturbation theory. Look at the temporal neighbourhood of the good times. Consider higher order effects. Latent factors will emerge, which should have made the analysts stop and ponder. And across Africa, we underrate institutional resilience. That is, the norms and values weaving the space of policy. We imagine infrastructure changing people overnight. Construct that road and economic progress will follow! That’s the thinking. We call it cargo cult.
Perturbation is most useful in the higher-income emerging democracies. Most of those countries are a dual interaction of the state and market. Society is less excited. However, as society becomes excited – as democracy lifts – we move away from the two-body situation. The space becomes perturbed.
Often, though, we dive straight into very messy policy situations. Then, we need complexity science.
#4 Complexity Science: Confronting the Messy Reality of Policy
The typical country is a messy democracy. With mobile phones on the palms, people are expressing opinions and making demands. The order is 10^7. It’s removed from the Newtonian frame. And statistical mechanics of Boltzmann isn’t helpful. It addresses order 10^24. So, we need a new frame of analysis. That frame is complexity science. What does complexity science say? New phenomena will emerge that don’t subscribe to the rules we know. We call it emergence. That’s scary. We can’t count on experience. We need fundamental tools of knowing and the ability to summon them quickly. We need more science than experience. But experience embeds in the fabric of society (in the institutions). Consequently, experience makes outlandish claims. That’s evil.
Part III: Questions for the Road
1. Will Africa learn from the emerging debt crisis? Always start with crises. They offer us the best opportunity of rebuilding. They are holonomic moments.
2. What will be the role of external private money?
3. How will external private money engage with emerging domestic money pools?
Thank you all.
[1] I can calculate the motion of heavenly bodies, but not the madness of people. Cf. Prigogine, I. and Stengers, I., 2018. Order out of chaos: Man's new dialogue with nature. Verso Books.
[2] More formally, use perturbation theory when the Hamiltonian of the policy space in question relates closely with a well-known Hamiltonian.