0.1. LEARNING TO COMPETE: RESPONSES TO GLOBALISATION FROM AFRICA
Africa is faced with a massive challenge to its successful economic and social development. Through the 1980s, most countries on the continent saw their performance on economic and social indicators decline. Whilst some improvement was seen in the 1990s, it is far from clear that the corner has been turned. Moreover, the late 1990s raised the importance of new imperatives that much of the continent seems ill prepared to face: globalisation and pro-poor growth.
The "Learning to Compete" project has sought to engage with this situation, through the collection of data in Ghana, Kenya and South Africa by a multi-national and multi-disciplinary team. This final report focuses on the challenges and the opportunities for these African countries, and, by extension, many of their neighbours1, to respond to external pressures and for their peoples to enjoy improved livelihoods. These require a much greater focus than hitherto on the learning of individuals, enterprises, institutions and nations in order for development to have a good chance of success.
1 Given the nearness of North Africa to Europe and its better integration into global systems, Africa here will be used as shorthand for the Sub-Saharan region.It is important to stress the connected nature of three sectors: education, training and small enterprise development. This leads to a focus on the notion of "learning-led competitiveness", as a way of stressing this connectedness. The notion of "learning-led competitiveness" is concerned with the impact of facets of globalisation on the struggle for international competitiveness and sustainable livelihoods. The report takes the view that globalisation is a major challenge, as well as a potential opportunity. Whilst countries in Africa often seems ill-placed to compete successfully, if globalisation is not addressed this will result in the region falling even further behind other regions in accessing global markets.
Globalisation pressures increase the priority for enterprises in Africa of developing strategies that can maximise their competitiveness. Globalisation also reshapes the nature of competitiveness strategies. In particular, it heightens the importance to enterprises of capturing the benefits of institutional and individual learning. Whilst education and training do not determine enterprise success, it is clear that they can play an important role in such success.
The report seeks to explore how such a focus shapes our current understanding of the possibilities for enterprise development. Given the arguments in favour of the relative efficiency of smaller enterprises, and the preponderance of such enterprises in most African contexts, the principal focus will be on small and micro enterprises (SMEs). This focus, however, cannot be totally divorced from a consideration of the health of larger enterprises. Indeed, relationships among enterprises of different sizes are an important element of a learning-led competitiveness approach.
A focus on learning-led competitiveness allows new questions to be raised about the performance of education and training institutions and systems. The report examines evidence about education and training performance in this new light and raises a series of important questions for future developments.
0.2. SUPRA-SECTORALITY
Although we examine learning-led competitiveness through its impacts on the three sectors mentioned above, there is a concern throughout to stress the importance of connections among them and of overall policy coherence. The argument is that policy and practices in the three sectors increasingly do converge around common themes and that this must be systematically acknowledged and acted upon. Moreover, the report frequently highlights the necessity of locating sectoral policies and programmes within the context of what is happening in other sectors and in overall development planning and policy. This highlights a major capacity challenge for both African governments and international development agencies.
0.3. TOWARDS THE LEARNING ENTERPRISE
Successful SMEs can be found in all three project countries that demonstrate learning-led competitiveness strategies. In each country, new, more dynamic niches are being exploited, such as in fashion and design in Ghana, machine tool manufacture in Kenya and West African clothing in South Africa. In several cases, new processes and technologies can be seen in action. A number of SMEs in each country are engaged in exporting and in supplying products and services to large manufacturers and retailers.
However, it is not easy to be a learning enterprise. There are significant obstacles that make it hard for enterprises to adopt learning-led competitiveness strategies or limit the benefits that arise from such strategies.
Development policies, including structural adjustment, have been less successful than intended both in stimulating macroeconomic conditions and in directly assisting SMEs. Indeed, there is some evidence that economic policies and trends have made it harder for dynamic SMEs to flourish. Crucially for our perspective, this includes tendencies towards market saturation and customer price sensitivity. The ability to develop and maintain niches that support sustainable livelihoods is constrained by such pressures.
High levels of corruption and low levels of trust also undermine enterprises' ability to grow and, crucially, to network. This undermines learning-led competitiveness by weakening enterprises' ability to acquire new information, skills and technology and reducing their responsiveness to new trends. Equally, the widespread inadequacies of infrastructure faced by producers and the problem of insufficient capital are constraints on enterprise responsiveness. These factors may prevent entrepreneurs from becoming more competitive even where they have adopted appropriate learning strategies.
Moreover, the report notes that many entrepreneurs are far from following learning-led competitiveness strategies and, indeed, are not driven by entrepreneurial goals. Rather, such individuals see their SMEs as having the primary function of providing income that can then be invested in other household activities and strategies such as education for children and land acquisition. This non-entrepreneurial outlook is doubly significant. It reduces the likely profitability and growth of enterprises and, if not taken into account, can lead to reduced effectiveness of interventions.
All these obstacles to learning-led competitiveness must be taken into consideration by those planning interventions. Enterprises often need to be helped to learn and the current focus on enabling environments could usefully encompass a new concern with enabling learning environments for small and micro enterprises.
0.4. COOPERATION FOR COMPETITIVENESS
Whilst the primary focus of the report is on competitiveness, it is important to note that cooperation is increasingly used as an important strategy to aid competitiveness.
The role of cooperative relationships in promoting learning-led competitiveness is considered. Such relationships come in many forms but, where functioning correctly, they all serve to enhance individual enterprise competitiveness and efficiency. Such relationships occur both vertically, between different sized enterprises, and horizontally, across comparably sized enterprises, and across the public - private divide. They are clearly advantageous to a learning-led approach to competitiveness as they have, at their core, processes such as information sharing and skills transfer. Nonetheless, the report argues that the focus on cooperative relationships has not yet sufficiently emphasised the role of learning and recommends that action be taken to address this absence.
It is important to highlight the role that informal sector associations are playing in strengthening inter-firm relationships and providing services to their members. Whilst many such associations are still weak, they appear to have considerable potential to coordinate competitive responses to new economic, political and technological challenges. In some cases, they have already become involved in the development of training programmes and other interventions to this end. However, it is equally important to note the fragility of such associations and the need for extreme caution in intervention. There is also considerable international variation in the significance of such associations. They appear to be stronger in West Africa than East, and East than Southern Africa.
It is essential that caution be exercised when seeking to interact with such associations. Nonetheless, they are sufficiently important to SME development that exploration should be made of possible modalities for their better integration into official development strategies, both for the SME sector and beyond.
0.5. SMALL AND MICRO ENTERPRISE POLICY AND LEARNING-LED COMPETITIVENESS
There is growing attention in the policy arena regarding SME development, and policy in this sector continues to evolve. However, it is worth noting the frequent weakness of such policy, both in regard to its recognition of global challenges and its grounding in local realities and possibilities. In addition, there continues to be scepticism on the part of many entrepreneurs regarding the commitment of the state to enterprise development.
SME policy has at its core a focus on enabling environments (particularly concerning regulatory frameworks), microcredit and, recently, business development services. These trends are reflected in each of the project countries. Policies for small enterprise development are also becoming better integrated with economic development policies more generally. Each of these areas will continue to require attention. However, the report argues that globalisation challenges highlight the need to focus policy more deliberately on the promotion of competitiveness. It suggests that the core of such a focus should include a new consideration of how learning can contribute to enterprise competitiveness and growth.
0.6. AN INCREASED COMPETITIVENESS FOCUS FOR EDUCATION
Education is an important factor in enterprise success, but is not a sufficient condition for such success. There is not enough evidence to justify the assumption that a basic education alone will have a significant impact on individual productivity and enterprise performance. Higher levels of education will often be necessary. Moreover, market conditions will need to be such that educational impacts can accrue to enterprises. A virtuous cycle needs to be encouraged that can allow more education to feed into better enterprise competitiveness, which in turn can encourage higher levels of education to take advantage of new technological niches.
These conclusions imply that the current commitment to universal primary education (UPE) by 2015 should be seen more strongly as part of a complete education sector strategy and of an overall development vision. UPE should also be informed more explicitly by considerations of the broader economic, as well as individual, consequences of education. The report suggests that such a focus can complement the UPE drive by promoting a better focus on relevance and thus raising perceptions of educational quality.
The education systems studied here are currently facing major resource constraints, a phenomenon experienced even in relatively wealthy South Africa. Moreover, the performance of these, and other, African education systems is inadequate in terms of attendance, quality and relevance. This has led to a growing focus, encouraged largely by donors, on a lean curriculum, concentrating on a handful of key subjects: mathematics, science and important national and international languages.
Nonetheless, it is imperative that globalisation's implications for education and development should form the basis of a revisiting of the debate about appropriate curricula for the different contexts within Africa. The report suggests that such a narrow curricular focus could threaten African countries' prospects for economic competitiveness. Literacy and numeracy will necessarily form part of education's contribution to individual, enterprise and national development. However, education provision needs to build a stronger focus on the other essential elements of knowledge and skills for development and international competitiveness in the context of globalisation. This requires those involved in educational planning to look beyond basic education to consider the appropriate modalities through which individuals can access an expanded notion of basic learning needs for competitiveness. Such modalities may vary both within and across countries. However, the challenge of developing a "curriculum for competitiveness" is common to all countries globally. This requires that education systems focus far more clearly on the ways in which education can empower individuals to become more competitive and to respond most effectively to their economic environment.
0.7. TRAINING UNDER GLOBALISATION
Globalisation places a new emphasis on skills development, which has been widely neglected in international policy thinking recently. It highlights the role of training systems in equipping individuals, enterprises and economies to be more competitive. To lack skills and access to training is to be outside the community of those who may potentially benefit from globalisation. Lack of skills means that individuals are increasingly likely to struggle to gain wage employment and lack key capabilities that could enable them to access sustainable niches in self-employment. Thus, training is important for competitiveness and social inclusion. However, it is absent from the current international model of poverty eradication and too little emphasised in growth strategies. This, the report concludes, is a serious weakness in development policy and is in need of rectification. This could include the emergence of a generally agreed target for training, stressing its equity and growth aspects. Any such renewed stress on training requires a reconsideration of the location of authority for training matters in both national governments and development agencies.
The report charts the considerable policy attention to training for self-employment, and the wide range of projects directed at this end across the project countries and beyond. It notes improvements in policy and practice in all three countries but concludes, overall, that institutions are still insufficiently responsive to demand. It also argues that policy continues to show inadequate consideration of issues surrounding training for self-employment. These include a consideration of the skills, knowledge and other inputs necessary for accessing real and potential market opportunities and the issue of whether training for those already in SMEs is more effective than training for those who may subsequently enter the sector.
Globalisation emphasises the importance of responsiveness of training institutions in a number of ways. One element of this is an increased need for training providers to be able to respond to the needs of students and enterprises. The learning-led competitiveness perspective leads the report to emphasise the importance for providers to focus more sharply on how their training gives their clients a competitive edge. Stronger mechanisms are needed to link training providers with the enterprise communities they serve. However, the drive towards cost recovery in many cases has undermined such linkages through the encouragement of institutions to produce in competition with local enterprises. Instead, there is a need to think carefully about why cost recovery is required and how best to achieve it, if a clear need is present. Where it is necessary, cost recovery should be reoriented to concentrate on providing services of value to local enterprises of all sizes. Thus, carefully targeted cost recovery can strengthen institutional embeddedness and responsiveness. The report also encourages a consideration of how training providers can follow the lead of small enterprise development and shift their own focus to better reflect the possibilities to support business linkages. However, it concludes that responsiveness is frequently undermined by inappropriate funding mechanisms and government regulations. Complete cost recovery is unlikely ever to be a possibility and the state will and should have a significant funding role. In shaping this role, it is vital that the government should facilitate the development of training that is responsive to the needs of all its constituencies and to the challenges of competitiveness and equity. Such responsiveness is far more important than a simple commitment to cost recovery.
0.8. SKILLS DEVELOPMENT WITHIN SMALL AND MICRO ENTERPRISES
Where they operate, Africa's indigenous apprenticeship systems have been highly successful sources of skills transfer. There is evidence of technological development in certain sectors in all three countries. However, the extent to which this can continue to be the case in the context of globalisation does need to be questioned. The negative effect that adverse economic conditions can have on skills transfer and technological progress within the SME sector should also be noted. Such concerns have led to a rise in major programmes designed to intervene in the indigenous skills development systems.
Nonetheless, caution is needed regarding intervention in such systems, even if they are struggling with new challenges. Interventions can tend to undermine these systems' self-reliance. At the heart of the difficulties with interventions is their sustainability. Moreover, they can threaten the self-replication of the existing, indigenous system, particularly when they flood the system with donor funds.
Nonetheless, there may be a case for continuing to pursue the possibilities of interventions given the existence of concerns about the indigenous systems. It may be that the best chance for success lies in interventions that reflect the expressed needs of masters and apprentices; include informal sector associations in a wide range of activities; and combine modest external funding with a realistic strategy for financial sustainability. However, here it is important to note that indigenous systems of apprenticeship are neither everywhere present, nor always as formalised as in many West African countries. The challenges of intervention may be less than those of developing systems from scratch.
0.9. SKILLS TRANSFER FROM LARGER ENTERPRISES
There appears to be a mixed picture concerning the transfer of skills and personnel from larger to smaller firms. It has been suggested that this process is in decline and that the large scale retrenchments from public service across Africa have not had the anticipated positive effect on small enterprise development. Nonetheless, there is evidence, most strongly from Kenya, that the transition of workers from larger to smaller firms and from wage to self-employment is continuing. Where this emerges from a purposeful move to take advantage of perceived market opportunities, then it appears to be an important source of learning-led competitiveness for the SME sector. Evidence about the pathways to self-employment of successful entrepreneurs continues to suggest a high road from school to training (often a mixture of formal and informal, crossing enterprise- and institutional- based modalities) and thence to wage employment, before ending in sustainable self-employment. Such a road is a long one, making interventions difficult. It is also a route on which major barriers prevent many from beginning the different stages of the journey. As such, it cannot be the primary route to skills and technological development for small and micro enterprises.
The notion of straddling, whereby workers are employed (often in large formal firms or the public sector) whilst carrying out SME activities, has gained increased attention in recent years. This has included an interest in encouraging the move to self-employment through sub-contracting relationships that can be mutually beneficial to the original employer as well as the newly independent entrepreneur. Nonetheless, it is also important to note that straddling may be a long term, individual strategy for profit or survival as well as a transitional phase between two modalities of work.
0.10 TOWARDS HOLISTIC THINKING AND COHERENT ACTION
The report highlights the importance of holistic thinking that brings together perspectives from across sectoral boundaries. It is important, for instance, that small enterprise developers are aware of thinking in educational circles regarding appropriate curricular content, or that educators and trainers grasp the significance of debates about enterprises' collective efficiency.
Learning-led competitiveness is a major real world problem that requires trans-sectoral understandings and coherent actions across a range of sectoral and overarching policy areas and concerns. Too often, sectoral policies and their implementation are undermined by a failure to grasp and apply insights from other contexts and by inconsistencies between policies and programmes. Staff development will be important in promoting organisational capacity to think holistically and act coherently. Equally, the report stresses the importance of structures that facilitate cross-ministerial networking
