Chapter One: Developing a Learning-Led Competitiveness Approach

1.1. THE CHALLENGE FOR DEVELOPMENT IN AFRICA

Across Africa, countries are faced with a massive challenge to their successful economic and social development. Through the 1980s, the performance of most African countries on economic and social indicators declined. Whilst some improvement was seen in the 1990s, it is far from clear that the corner has been turned (Killick 1999). Moreover, the late 1990s raised the importance of vital challenges that the continent seems ill prepared to face: globalisation and pro-poor growth.

1.2. THE "LEARNING TO COMPETE" PROJECT

The "Learning to Compete" project has sought to engage with this situation. It focuses on the challenges and the opportunities faced by three African countries in responding to external pressures and for their peoples to enjoy improved livelihoods. These, it argues, require a much greater focus than hitherto on the learning of individuals, enterprises, institutions and nations in order for development in African countries to have a good chance of success.

At the heart of this report is a desire to stress the connected nature of three sectors: education, training and small enterprise. As the report will argue, the importance of convergence amongst these three sectors is increasingly acknowledged, both in theory and practice. This report will focus on the notion of "learning-led competitiveness" (see below), which describes the areas of convergence amongst the three sectors.

This report is the outcome of a partnership amongst researchers in four countries: Ghana, Kenya, Scotland and South Africa. This partnership is reflected in the joint and collective authorship of this report. Data was collected in Ghana, Kenya and South Africa. Whilst context is very important, the report will seek to focus on the lessons that emerge from research in all three countries, rather than taking each country case individually. A major concern will be with making propositions that arise from the three cases but are likely to be more widely relevant in other African contexts. However, these propositions should be seen as themes to stimulate debate about national possibilities, rather than a blueprint for action at the country level.

The report draws on 29 papers produced by the research team (see appendices 1 and 2), which produced large amounts of field data, as well as reviews of the existing literature. It also draws extensively on data presented at a project conference, held in Edinburgh in May 1998¹, and the three project workshops. This conference and workshop data is drawn from the research of a wide range of academics and practitioners and includes evidence from the three project countries and beyond. Where relevant, reference will also be made to the broader literature in other African countries and the relationship between this and project data in crucial areas will be considered.

¹ Much of this data has been published as King and McGrath (eds.) (1999) Enterprise in Africa: between Poverty and Growth.

It is important to say a few brief words about the notion of "learning-led competitiveness". Learning here encompasses schooling, institutional-based training, on-the-job learning and learning across enterprises. The concern with its relationship to competition arises from the impact of new processes of global competition on the struggle that the many poor in Africa countries face in achieving sustainable livelihoods. These individuals, their communities and their nations are forced to compete in spite of unfavourable environments.

The report is concerned about the possibilities for competitiveness at the level of the entrepreneur, enterprise and economy. It equally focuses on competitiveness at the level of the student, the learning institution and the society. In all this discussion, the primary focus of this report will be on the role that learning can play in promoting such competitiveness. It is assumed that there is broad sense in arguments which suggest that knowledge and skills are increasingly crucial factors of production and elements in competitive advantage. The report also considers the ways in which 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.

The report also seeks to explore how such a focus shapes our current understanding of the challenge facing enterprise development. Given the powerful arguments in favour of the relative efficiency of smaller enterprises (McGrath and King 1996) and the preponderance of such enterprises in many African contexts (Mead 1999), the principal focus here 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 between enterprises of different sizes can be an important element of a learning-led competitiveness approach.

Competition, of course, can be over-celebrated. The report notes growing concerns with over-competition amongst SMEs. The report also reflects the possibility of a creative tension between competition and cooperation. An interest in the importance of "learning to cooperate" leads the report to consider structures that promote inter-firm learning for competitiveness.

At the heart of the report's concerns with data from its project countries are a number of areas for reflection and action:

· the role of learning in strategies for success in small and micro enterprises

· the kind of learning required to help individuals, firms and society respond successfully to globalisation

· the contribution of education and training institutions to national and individual competitiveness

· the structures that encourage or facilitate learning for, across and within enterprises to be more competitively oriented.

The recent growth of sector programme support requires some reflection on the way that this report addresses sectors. At the heart of our approach is a stress on thinking beyond the sector. The current donor attempts to develop sector programme support almost necessitates a counterbalancing emphasis on the need to think supra-sectorally.² The emphasis of this report is on an approach that sees connections between sectors (Norrag News, 1999).

² It is possible to identify three distinct levels of thinking beyond sectors. Cross-sectoral is often used to refer to collaboration between well-defined sectoral structures on matters of joint interest where no new structures are developed. Inter-sectoral can refer to cases where structures are established that are designed to coordinate across still well defined sectors and on specific issues, with responsibility still lying in the final instance with sectoral structures. Trans-sectoral refers to organisation around issues rather than around sectoral logic. In this view, there are no "home" sectors to command the loyalty of members of structures. In reality, the latter form is less apparent than the earlier types. This report will refer to supra-sectorally in order to talk about the notion of working beyond sectors generically.

1.5. GLOBALISATION

Globalisation, seen as the intensification and expansion of market forces on a broadly international scale, is a far older and persistent process than is popularly understood (McGrath and King 1996; Rao 1998). Many of the new phenomena claimed for globalisation in the late twentieth century can in fact be traced far further back, particularly into the "Age of Imperialism" of the last quarter of the nineteenth century. The long term nature of many of the trends claimed as part of globalisation points to the need to be more specific about what has really changed (Watkins 1997). Key elements where change is really qualitatively significant include the areas of telecommunications, financial markets, currency speculation and cross-national product assembly. However, we must keep in mind that globalisation's extent is uneven (Rao 1998). Moreover, it is frequently its power to shape the way that policy and practices are understood that is at the heart of its significance.

There is considerable contention regarding the impact of globalisation. For some, it signals the final victory of neo-liberalism. Others, less expansively, focus on the positive effects on markets, on communication, on policy. However, there is a counter-position which sees globalisation as the victory of the rich and powerful and of the West in particular. In this view, globalisation accelerates inequality and marginalisation. Whether seen as an opportunity or a threat, it does appear that globalisation is a major force in contemporary society that places a heavy emphasis on learning. Indeed, as this report will show, education, training and enterprise will form important elements of any strategy to respond to the new environment. Responding to globalisation does not necessarily lead to success (Rao 1998). However, it seems clear that African countries will need to seek to turn globalisation into an opportunity; no matter how threatening it is at present.

1.6. DEVELOPMENT DEBATES

We have already noted the importance of thinking trans-sectorally and it is evident that policies and practices in the sectors of education, training and enterprise development cannot be understood in isolation from broader debates about development strategy. Development thinking and policies at the moment display a series of important tensions: between growth and equity, economic and social factors, state and market, ownership and conditionality.

1.6.1. Structural adjustment

Since the beginning of the 1980s structural adjustment programmes, proposed by the IMF and the World Bank, have spread across most of Africa. At the core of structural adjustment is the argument that good economic performance is built upon liberalised trade, macroeconomic stability and getting prices right. These then mean that markets will work properly and the resultant growth will lead to reduced inequality. In this view, the state cannot work impartially but will be captured by vested interests. The state crowds out the private sector but is an inefficient provider itself. It also distorts markets.

However, there has been a sustained critique of both the assumptions upon which structural adjustment is built and its performance in practice. From the South African context, Woolard and Barberton (1996) argue that growth does not lead to reduced inequality, but that, conversely, reduced inequality helps promote growth. The World Bank also admits that structural adjustment has failed to deal adequately with the household and informal economies because they do not appear in the National System of Accounts (World Bank 1994). Moreover, it is argued that structural adjustment is blind to many structural and power imbalances such as gender (Stromquist 1999).

One of the prime interests of this report in structural adjustment is its effect on SMEs. It has been assumed that structural adjustment will benefit smaller enterprises by reducing the productive reach of the state, limiting bureaucratic rent-seeking and allowing access to cheaper, imported intermediate goods (King 1999). However, there have been criticisms that have pointed to the saturation of the SME sector due to downsizing in larger firms and the public sector, the rising cost of inputs and the dumping of imported, often second-hand, goods (Adam 1999; Visser 1999a). We shall also be interested in the extent to which adjustment has helped or hindered the ability of education and training to respond to the challenge of learning-led competitiveness.

1.6.2. The developmental state

At the heart of structural adjustment is a strong belief in the inadequacy of the state as a development tool. This position is challenged by a range of authors who have looked particularly at East Asian experiences for examples of where the state has been an important actor in development (Amsden 1989; White and Wade 1991). As these economies are the best examples of a successful graduation to industrialisation, their example seems particularly important.

It seems likely that the East Asian economies are regaining their vitality, although the pernicious effects of globalised currency speculation will have a lasting effect on economies and individuals. The East Asian example seems to show that success in the global economy will be fragile given such movements. However, its positive lesson is that success can be achieved if a series of factors are in place. There is a considerable danger in assuming African countries are prepared either culturally or in terms of capacity to follow this route. Nonetheless, the Asian example highlights a number of important factors that African countries need to consider when aiming towards genuine "take-off".

In spite of globalisation, development is still a project that states and peoples can consciously attempt to construct, notwithstanding the major constraints on political and economic action. Industrial strategy is not about the monolithic state that existed (but more in theory than practice) in post-independence visions of African development. Rather, it is about a proactive state that seeks to bring the state, market and people together to work for development and that attempts to balance growth with equity. Rao (1998) argues that a conscious national learning strategy, with education and training at its core, is crucial to such an overall aim. Equally, facilitating enterprise competitiveness has been at the core of the East Asian approach.

1.6.3. Pro-poor growth

The Copenhagen Social Development Summit of 1995 pointed to a new approach to development and has had a major impact on development cooperation and national policies. The Summit highlighted the importance of focusing development and development assistance more clearly on the eradication of poverty. This led to the establishment of a series of international development targets (IDTs) by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD-DAC 1996).

Development has always been about poverty. However, it has also been about growth and the relative importance of the two has shifted over time (Riddell 1997). Whereas structural adjustment is primarily a growth-oriented policy, the introduction of the IDTs has returned poverty-oriented policy to centre stage. Increasingly, policies of donor agencies are being reformulated to be more poverty-focused. National policies in the South are following a similar trend through the emphasis on national poverty eradication plans. This Southern refocusing on poverty is evident in different forms in our three project countries.

The heightened poverty agenda has major implications for the three sectors being studied here. As regards education, it is clear that the IDTs explicitly privilege basic education and implicitly downplay the importance of other sub-sectors. The IDTs tend to discourage critical analysis of how education contributes to development and fail to emphasise many of the crucial issues which we shall raise in Chapter Three. Strikingly, neither training nor enterprise development is accorded any value as an element of pro-poor growth in the IDTs.

1.6.4. The Comprehensive Development Framework

The World Bank is moving towards a position stressing social as well as economic elements of development. The Bank's recently departed Chief Economist, Joseph Stiglitz, has been highly critical of the way that neo-liberal ideology has over-ridden development concerns and how fiscal conservatism has privileged stability over growth. He also suggests that privatisation has been accorded more importance than institutional infrastructure and competitiveness. He accepts that markets underprovide on education, training and technology and argues that promotion by the government of social learning is crucial (Stiglitz 1998a and b).

These self-criticisms led the Bank to formulate a new policy approach in early 1999 as the Bank's President, James Wolfensohn, launched the "Comprehensive Development Framework" (CDF) (Wolfensohn 1999; World Bank 1999). This makes explicit the need to balance economic and social development concerns and to ask how sectoral policies contribute to overall goals. Moreover, it stresses processes as much as outcomes and the need for genuine partnership to drive the development process (World Bank 1999). The new approach offers the possibility of a focus on how developmental needs can be met and a willingness to consider how pro-development systems can be actively promoted. As such, it has the potential to overcome some of the constraints on learning-led competitiveness that arose out of structural adjustment.

The Comprehensive Development Framework approach is far too new for us to have a strong sense of its implications for development, and the departure of Stiglitz may be significant. Its vision is a welcome one in so far as it offers balance and partnership. A major challenge lies in moving beyond the Bank's often too narrow economic vision of structural adjustment. Of equal importance is the need to make the social development vision of Copenhagen and the IDTs better grounded in concerns about the developmental impacts of the chosen targets. Progress in the sectors of education, training and enterprise development, and towards the notion of learning-led competitiveness, is likely to be positively affected if the CDF, and similar trends within the UN movement, can create a more holistic sense of development.

1.7. COUNTRY CONTEXTS

The data collected by the project team is about education, training and enterprise in Ghana, Kenya and South Africa. Although the research has been concerned with better understanding those sectors in those countries, it also aims to develop a notion of learning-led competitiveness as a tool to analyse policy and practice across sub-Saharan Africa.

Nonetheless, such a notion has been shaped in significant ways by those national contexts. For this reason, we shall turn now to some brief comments about those national contexts. These are designed to assist readers to get further critical purchase on the data presented in the subsequent chapters and to remind them that our propositions need to be tested in the light of specific situations.

1.7.1. Ghana

On independence in 1957, Ghana seemed set for a successful future as an independent country. However, from the late 1960s until the early 1980s, it appeared that this potential had not been realised. Beginning with the 1983 Economic Recovery Programme (Afenyadu 1997a), Ghana has been one of the strongest implementers of structural adjustment. Whilst the economy has slowed down somewhat in the 1990s (Afenyadu 1997b), Ghana has begun to move beyond adjustment and recovery towards planning for the future. It is the Vision 2020 (National Development Planning Commission 1994) process that forms the centre piece of this new strategy.

Vision 2020 is inspired by East Asian examples (Afenyadu 1997b). Whilst it still is heavily influenced by structural adjustment approaches (Afenyadu 1997b), the Ghanaian industrial strategy is built explicitly on globalisation and competitiveness considerations (McGrath 1997b). It has a largely realistic vision of building from a principal reliance on production and processing of agricultural and forestry goods towards entrepreneurship, innovation and international trade (McGrath 1997b). The policy also maintains a powerful anti-poverty focus and there is a strong emphasis on the role of the private sector in development.

Education, training and SME development are all seen as crucial to the overall development policy, and the Vision 2020 report emphasises:

· educational quality improvements;

· problem solving and inquiry;

· increased technical and vocational education and training;

· better education and training - private sector linkages;

· promotion of informal sector activities;

· increased access to credit, technology and other services; and

· a focus on rural areas and the urban informal sector. (National Development Planning Commission 1994)

1.7.2. Kenya

Kenya has seen the end of its one party state. However, there is continued political uncertainty and donor reticence about supporting the current government. Part of this political tension is related to the gross inequalities in Kenyan society. The country's Gini coefficient³ of 0,57 (Republic of Kenya 1999) is only slightly better than South Africa and one of the very worst in the world.

³ The Gini Coefficient is a measure of income inequality that considers distribution of income over a population. 0 represents perfect income equality; 1 perfect inequality. A figure of over 0,5 is indicative of very serious inequality.

The 8-4-4 education reform of 1984 has been questioned both by the Master Plan for Education and Training (Republic of Kenya 1998) and the Totally Integrated Quality Education and Training report (Republic of Kenya 2000⁴). However, neither has yet been implemented, nor does such implementation look likely in the immediate future. A new draft policy has also emerged in the small enterprise development sector (International Centre for Economic Growth 1999) but this has not yet been finalised. This uncertainty over policy processes is a key weakness of the current Kenyan polity.

⁴ The report is dated 1999. However, it was not released publicly for over six months and we shall use the actual publication date of 2000.

The mid 1990s saw the final victory over apartheid with South Africa's first democratic elections. This set the stage for a drive towards broad-based development. In 1994, the African National Congress launched their proposals for a Reconstruction and Development Programme (RDP) as the centre-piece of their election manifesto. By the mid-point of their first term in government this had been replaced as the core of government policy by the Growth, Employment and Redistribution (GEAR) policy. The official line from the South African government is that GEAR is simply the operationalisation of the RDP vision. However, critics argue that there has been a shift to fiscal policy, which serves to constrain rather than enable development (Adelzadeh and Padayachee 1995; Marais 1998; McGrath 1998a).

However, South African policy also points to redress and equity (King 1997). Thus, the South African poverty report argues that GEAR is likely to lead to a trade off between reducing inflation and increasing unemployment (Republic of South Africa 1998a). There are also elements of a pro-active growth orientation within the South African state. The Department of Trade and Industry and the Department of Labour are involved in a range of more pro-active programmes, including Spatial Development Initiatives; a clustering initiative; infrastructural development and the Labour Market Commission (McGrath 1998a). These are also linked to the technology strategy of the Department of Arts, Culture, Science and Technology (Republic of South Africa 1996).

Although an upper middle income country, South Africa's extremely high level of income inequality (a Gini coefficient of 0,58: approximately double that of Indonesia or Sri Lanka) means that poverty levels are high (Woolard and Barberton 1996). 60% of South African children live in poor households (income less than R353 per calendar month) (Republic of South Africa 1998a). There are huge internal disparities. The white Human Development Index (HDI) is equivalent to that of Canada; the African one is level with the Congo Democratic Republic. The Western Cape Province's HDI is on par with Singapore (43rd globally); Northern Province's is equivalent to Zimbabwe's (121st). Women's HDI is 20% less than men's (Woolard and Barberton 1996). Inequalities within groups are also very large in many cases. For instance, the Gini coefficient for Africans is 0,54: far higher than for whole populations of most countries (Republic of South Africa 1998a).

Inequalities based on race are of great importance in our three sectors. One of the key special characteristics of the South African SME economy is the presence of powerful historically white enterprises at the upper end of the SME segment, and above in the medium and large enterprise segment. South African enterprise development thus has to wrestle both with racially-tinged tensions between smaller enterprises (and potential racial barriers to vertical linkages) and the political pressure to empower some segments of the sector more than others. The apartheid legacy of differentiated access and attainment in education and training complicates this situation and confronts those sectors with huge problems.

South Africa's education and training reforms are structured around the National Qualifications Framework (NQF). At the school level, this is reflected in the new outcomes-based approach of Curriculum 2005 (Department of Education 1997a and b). The Department of Education has developed a new policy for technical colleges (Department of Education 1998; Republic of South Africa 1998b), whilst the Department of Labour has developed a Skills Development Strategy including the notion of learnerships, a modernised form of apprenticeship (Department of Labour 1997).

The South African White Paper on small, medium and micro-enterprises (Republic of South Africa 1995), like its Kenyan counterpart, reflects considerable awareness of international policy debates. However, it tempers these with a strong concern with the specificity of South Africa's history and aspirations, being highly focused on the needs of particular target groups of the disadvantaged (Rogerson 1999b; Visser 1999c).

1.8. THE STRUCTURE OF THIS REPORT

The report will now turn to consider how the notion of learning-led competitiveness can inform thinking about the role of education, training and enterprise development in overall development strategies. The next three chapters will look at these three sectors whilst retaining a concern with inter-connectedness.

Chapter Two will focus on the enterprise and the entrepreneur as learners. It will consider the potential role that learning-led competitiveness can play in enterprise development and the constraints faced by entrepreneurs and enterprises in taking advantage of learning. It will address the role that linkages among enterprises, meso level institutions and macro level policies can play in overcoming the constraints and supporting the potentials of SMEs.

Chapter Three will consider the role of education in individual, enterprise and national competitiveness and the relationship between current policies for basic education and the challenge of developing systems across the education sector to promote learning-led competitiveness.

Chapter Four will examine the role that skills development plays in developing enterprises. It will explore the notion of the responsive vocational training provider and how this relates to the challenge of upgrading skills development. It will consider the central role that indigenous systems of training play in skills development and the possibilities and desirability of interventions in these.

This chapter will be followed by an examination of the core research finding in Chapter Five. Finally, there will be a shift from research to policy in considering the implications of these findings in Chapter Six.