The ‘X’ factor: Ethical leadership and human capital

“Minister Mentor Lee’s views and insights on Asian dynamics and economic management were respected by many around the world, and no small number of this and past generations of world leaders have sought his advice on governance and development. I personally appreciated his wisdom, including our discussions during my trip to Singapore in 2009, which were hugely important in helping me formulate our policy of rebalancing to the Asia Pacific,” — President Barak Obama

Singapore gross domestic product (GDP) was US$64 581 per capita, in 2018. It has a business-friendly regulatory environment for local and foreign entrepreneurs and is among the most competitive economies in the world.

Since its independence in August 1965, Singapore rapidly developed from a low-income to a high-income country. GDP growth has been among the world’s highest, at an average of 7,7% since independence and topping 9,.2% in the first 25 years.

In the 1960s manufacturing became the main driver of growth. In the early 1970s, Singapore reached full employment and joined the ranks of the four Asian Tigers — Hong Kong Singapore, Republic of Korea and Taiwan, a decade later as Asia’s newly industrialising economies.

The manufacturing and services sectors remain the twin pillars of Singapore’s high value-added economy.

The overall growth of the Singapore economy was 3,2% in 2018, 0,7% in 2019 – due to the US-China trade war. Value-added manufacturing, particularly in the electronics and precision engineering sectors, remain key drivers of growth, as are the services sector, particularly the information and communications industries.

The Trade and Industry ministry downgraded its economic growth forecast to between -0,5 and 1,5% — indicating a possible recession — due to the outbreak of the coronavirus.

We’re down, but we’ll bounce back. Overcoming this crisis will require exemplary leadership across all manner of institutions – government, business, and social cohesion.

How did this country which started from a low economic base with no natural resources achieve this success? How did a small island in a big world create economic advantages with influence far beyond its region?

Can Africa learn from Singapore?

Singapore’s success can be attributed to five factors — pragmatic leadership; an effective public policy; effective control of corruption; investment in human capital; and learning from other countries.

The late Lee Kuan Yew, Singapore’s first Prime Minister (PM) and architect of the country’s economy of the last 50 years, was a frequent visitor to Africa in the 1960s.

On one such trip in 1964, he visited 17 African nations in 35 days to acquaint himself with what these newly independent countries, itself a legacy of European colonialism of the previous century, were doing to lift their economies.

Back then Singapore was looking to Africa for lessons on growing its economy. Kenya’s former PM and current African Union high representative for infrastructure development, Raila Odinga, said in 1968 “a team of Singaporeans came to Kenya to learn our lessons, since we were then a more developed country than they were”.

Fast forward 40 years later, Odinga took a trip to Singapore with six minsters, latest of many trips taken by the Kenyan government at the time. When they returned, each minister was tasked to prepare an action plan based on what they had learnt from Singapore for Kenya’s Vision 2030. I can’t comment if any of the plans were executed or not.

Across Africa, Yew is admired and some, particularly Rwandan President Paul Kagame, have sought to replicate his methods with varying degrees of success. Kagame attributed the Rwanda’s success to Singapore’s model of governance under the late Yew. Rwanda is often referred to as the “Singapore of Africa”.

Singapore’s economic development goes beyond that of one person. It established robust institutions with strong and honest leadership and commitment to achieve success for the nation. Lee was a charismatic leader, the public face of Singapore’s politics, but he was also backed by a formidable team. There was unity among the core group of leaders.

“One X factor remains a key differentiator, especially for developing countries; that is ethical leadership. A clean, efficient, rational and predictable government is a competitive advantage” — Lee Kuan Yew

Leadership

Lee was PM from June 5, 1959 through November 28, 1990. He remained in Cabinet as a mentor to younger ministers until he retired in 2011. He was in power for over three decades and during his term he had his fair share of admirers and haters, accused on clamping down on political freedoms as well as harsh social controls.

His style of leadership has been described as autocratic and dictatorial by some, transformational by others. He was straightforward, blunt, never afraid to speak the truth.
He was an emotionally intelligent person, yet assertive. He had the ability to influence followers and accomplish daunting task.

Singapore is not very different from many African nations.

Like African countries, at independence Singapore faced poverty, poor public health, an acute housing shortage, a stagnant economy and an exploding population. Africa too had leaders who have been in power for three decades or more. Africa was blessed with natural resources, Singapore only had human resources. The crucial difference between Singapore and African nations was in the quality of the leadership. In Singapore, political power was used for the benefit of development.

While many African leaders have used the State to enrich themselves, their families and cronies, Yew walked the talk on corruption. He regarded corruption as a cancer that had to be eradicated immediately when detected. He believed that raison d’etre of the State was to uplift the lives of its citizens and not prey on them.

Leaders must have the political will to ensure clean governance. Singapore controlled corruption by strengthening institutions and upholding the rule of law. In order to alleviate poverty a strong, inclusive, accountable and transparent governance structure was put in place, one that would strengthen national institutions and laws. An efficient, neutral, honest civil service with capable leaders was established, one paid well, that shared the same nation building philosophy and goals as the political leaders.

Since assuming power, the ruling PAP party in Singapore has made anti-corruption prerequisite for good governance and a centre of her development priority. Eradication of corruption provided a friendly and sustainable environment for investors and economic development, both necessary for any country to reduce high unemployment rates and accelerate economic development.

Corruption in Sub-Sahara Africa is hindering good governance, economic and social development. Unethical leadership and bad governance are prevalent across most part of Africa. Corruption is one of the greatest challenges facing governments as it undermines and distorts public policy, leading to the misallocation and misappropriation of resources. This distorts market efficiencies, which affect private sector development and produce negative economic effects that hurt the poor.

People want an honest, clean, able government that provides economic growth and prosperity for the nation. Many African leaders have denied their people a better life by their unwillingness, because of their own personal agenda, to build a government and institutions whose primary goal is to serve the people. A government that fails in the fundamentals of its existence is not fit to govern.

Even, the hardest-working African has difficulty building a life if his country’s political leaders and civil service are inefficient and corrupted.

To achieve excellence, success and compete in the international arena African nations must practice meritocracy in the civil service, in politics, in business and in education. To ensure progress and development leaders must govern by principles – build social cohesion, sharing the benefits of progress, equal opportunities for all, meritocracy, especially for leadership positions in government and public institutions.

You need good man to have a good government. It is about determination, persistence and consistency on the part of the leadership. Leaders need to have a deep sense of empathy towards their people, depend the vulnerable and poor, create better living standards for the people.

A new wave of leaders in sub-Saharan Africa have emphasised renewed commitment to fighting corruption. They recognise that low corruption and good governance is key to fostering growth and economic development.

Rwanda, which ranks as one of the least corrupted countries in Africa, has made holistic efforts to fight corruption. Rwanda’s achievements in its fight against corruption can be attributed to several factors – political will, zero tolerance policy, government culture of transparency and accountability, unity of the people, awareness campaigns, and enforcement of law.

The history of Singapore is a clear example of the close link between political stability and economic growth. African leaders must have a genuine commitment within their core leadership to eradicate the corruption and build systems that reduces opportunities for corrupt to thrive, make its detection easier, deter those susceptible to it and severely punish those who partake in it. Only when a government can guarantee security, avoid corruption and enforce the law will they be able to attract investments.

Low corruption and good governance are not the only drivers of growth.

The single most important factor to national competitiveness is a nation’s manpower resources
“The quality of a nation’s manpower resources is the single most important factor determining national competitiveness. It is a people’s innovativeness, entrepreneurship, teamwork, and their work ethic that give them the sharp keen edge in competitiveness. Three attributes are vital in this competition—entrepreneurship to seek out new opportunities and to take calculated risks. Standing still is a sure way to extinction. The second attribute, innovation, is what creates new products and processes that add value. The third factor is good management. To grow, company managements must open new markets and create new distribution channels. The economy is driven by the new knowledge, new discoveries in science and technology, innovations that are taken to the market by entrepreneurs.” — Yew

On April 11 2019, The World Bank unveiled the Africa human capital plan to help African countries strengthen their human capital, targeting to achieve this by 2023. The World Bank will be providing grants and concessional finance for human capital projects totalling US$15 billion in fiscal years 2021-2023.

The objective of the plan is to enable Africa’s young people to grow up with optimal health and equipped with the right skills to compete in the digitising global economy. The plan calls for a drastic reduction in child mortality to save four million lives, averting stunting among 11 million children, and increasing learning outcomes for girls and boys in school by 20%.

“His (Yew) vision was of a state that would not simply survive but prevail by excelling. Superior intelligence, discipline, and ingenuity would substitute for resources.” — Henry Kissinger

The World Bank human capital Index in its October 2018 report ranked Singapore the best country in the world in human capital development, top among 157 countries, with South Korea and Japan second and third respectively. The index defines human capital as the knowledge, skills, and health that people accumulate over their lives.
North-central African nation Chad is ranked the lowest among the countries at 157, with four countries from the continent among the bottom five: South Sudan (156), Niger (155), Mali (154), and Liberia (153).
The World Bank remarked that human capital has been the “key factor for sustained economic growth and poverty reduction rates” in many countries in the 20th century, particularly in East Asia.

Singapore’s former PM Goh Chok Tong (November 1990 – August 2004) stated in March 1997 that Singapore was blessed by its lack of natural resources because it was forced to develop its only resource: its people

The government invest heavily in education to enhance the skills of its population and to attract the best and brightest citizens to join and remain in the public sector and government by its policies of meritocracy and paying them competitively.

Education continues to be the key to the long-term future of Singapore’s population. Government spending on education has increased by over 70% from $5,3 billion for 2007 to an estimated $9,1 billion for 2018.
Africa today is a continent of growth and opportunities. Home to over a billion people, with a young, fast growing youth population in the world and 30% of the world’s known natural resources.

However, developing and enriching human capital is far more important for the economic growth of Africa compared to simply possessing natural resources.

Human capital drives economic development. The larger the stock of human capital that more the technological innovations. Investment in public education is the main contributor to the accumulation of human capital. Education is the key to the long-term future of Africa’s population.

Even though human capital is a key factor for economic growth many resource-rich African countries lack specialised training institutes. Governments must invest in higher education and training as it helps African countries excel in manufacturing production and move up the value chain.

Four pillars of institutions — infrastructure, human capital and technology, will drive manufacturing-led growth in Africa. But the inability of many African governments to focus attention on entrepreneurship, innovation, and management is partly a result of the excessive policy attention to the role of natural resources. Revenues from natural resources must contribute to the development of human capital through investments in education and jobs.

Africa is a continent with remarkable economic potential yet the least developed largely due to poor governance, corruption, and inadequate human capital investment to transform this potential into social and sustainable economic development. Policy makers must not hesitate to learn from other countries’ experiences to formulate relevant policies with appropriate modifications for the local context.

Singapore’s transition from a third world to a first world nation has hinged on the government’s credibility, respect and trust among its population, which has forged both a sense of common identity and unity of purpose. And that, in turn, has depended on its record of delivery rather than empty promises.

While it is impossible to transfer public administration Singapore-style in toto to other African countries, it is however possible for countries to emulate and adapt some features to suit their own needs, keeping in mind contextual differences between Singapore and their own countries. But this can only be possible first with a political will and if political leaders, civil servants, and population are prepared to make the necessary changes.

Singapore is far from a perfect society, neither is it a perfect democracy. What we have is possibly a pragmatic democracy that is a blend of Western democracy and our own pragmatic needs. Each country must find its own path but focused on the fundamentals of good governance, rule of law, uplifting the lives of its citizens and achieving prosperity for the nation.

“He was a visionary statesman whose uncompromising stand for meritocracy, efficiency and education transformed Singapore into one of the most prosperous nations in the world… His wisdom and leadership will be remembered by people all around the globe” — Christine Lagarde

Yew, passed away at the age of 91 on March 23 2015. Gone, but not forgotten. His insights and legacy on leadership, good governance, importance of human capital development, and economic policies, etc, are still relevant today.

Shaun Jayaratnam is a business consultant with extensive experience in Africa. He writes here in personal capacity.

The post The ‘X’ factor: Ethical leadership and human capital appeared first on NewsDay Zimbabwe.

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