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October 20, 2008

Festus Mogae of Botswana wins significant reward.

Good governance and enlightened democratic leadership issues have been highlighted for some time as part of the mix required to ensure the success of development strategies in sub-Saharan Africa. There are many aid initiatives in which good governance, transparency, anti-corruption practices and effective policy development are encouraged. The Mo Ibrahim Foundation takes a different approach and honors leadership success and commitment to democratic ideals. This year’s Mo Ibrahim Laureate is Festus Mogae, former President of Botswana who stood down in April after two successful terms in office. Who is Festus Mogae and what is the Mo Ibrahim award?

Festus Mogae has been associated with the Government of Botswana since his employment in the late 1960s to a planning post in Development Planning. In the early days of government he worked with a group of development oriented-officials (including Peter Landell-Mills and Quill Hermans) working under and strongly backed, administratively and politically, by the then Vice-President, Quet Masire. If Seretse Khama was architect of Botswana’s democracy, Masire was the architect of Botswana’s sustained and significant economic development. The two men worked hand-in-glove and Mogae developed his skills in economic planning in the context of a Ministry that was, thanks to Masire, increasingly the dominant force within the Government structure. Team-work became a significant part of the adminsitrative as well as political action. Mogae, whose University education was at Sussex (a University with a strong interest in economic development and location of the Institute of Development Studies, the UK’s leading development institute) and Oxford, continued to develop as an economist, and worked latterly for the International Monetary Fund and then the highly successful Bank of Botswana (Botswana’s central bank). Mogae returned to Sussex during his Presidency and gave a lecture on development at the Institute of Development Studies. If Botswana is a “developmental state? it is due to the work that took place in the early years of independence in the context of Masire’s leadership of Development Planning. When he retired from the civil service, Mogae joined the government, serving as Vice-President and then after the election in 1999, as President. The soft-spoken, Mogae made it clear in an interview reported on the BBC web site that he did not create democracy in Botswana but rather “consolidated it by practiced, accountable governance, respect of the rule of law, independence of the courts, respect for human rights, including women’s rights?.

Mogae has had to face a huge number of problems during his time as President, including the controversy over San rights in the Central Kalahari, but the most significant problem could be seen as that of the AIDS epidemic. Botswana has been hit hard by the disease. As is normal with the Botswana Government, the problem was admitted, analyzed and tackled through the use of the best-available domestic and international advice. It seemed that the advice was to go for prevention rather than treatment. Mogae took the view that the Government of Botswana could not abandon its infected citizens and went for a combination of treatment and prevention and obtained domestic and international backing for the policy. The prevention campaign itself did not beat about the bush. Whilst AIDS policy in neighboring South Africa was in disarray, Botswana took effective action. Mogae’s personal commitment and the provision of free access to anti-viral drugs was exemplary.

The Mo Ibrahim Foundation is a charitable organization set up by the founder of Celtel International, a communications company that operates throughout Africa. Its aims, which include recognizing f the achievement of African leaders so that they “can build positive legacies in the continent when they have left office? are backed by significant leaders such as Nelson Mandella. The prize money is huge and the panel of people who make the judgments include Mamphela Ramphele (former Vice-Chancellor of the University of Cape Town and Managing Director of the World Bank Group) and Mary Robinson (former President of Ireland). The intention of the prize is clearly to reward “virtue?, and shift the practices in that direction, but also to allow those with leadership skills to continue to support social development in their own countries. Festus Mogae now faces the leadership challenge of how to use the money to sustain political and social development in Botswana. His recognition is also Botswana’s recognition (team work is another attribute of good leadership). This is good news out of Africa and it ought to be celebrated. Let's hope that it encourages other policy makers in sub-Saharan Africa to look at Bortswana's development and democratic record.

October 14, 2008

Globality: Competing with everyone from everywhere for everything. (Sirkin, Hemerling and Bhattacharya; Business Plus, 2008) a Review by Willie Henderson

Just when you thought that the last word had been said on “economic globalization" along come three business consultants intent on changing the nature of the conversation. Multinational corporations, domestic producers in the western world have got to waken up to “globality" to the fact that the international market place now requires “competing with everyone from everywhere for everything". This is not an academic book though academics and their students would benefit from reading it. It is a book for business people stuffed full of enterprising examples drawn from the new global economic players, encouraging them to wake up to the fact that the emerging world has already emerged. What is “globablity and what, if anything, is this book’s new message?

This book’s thesis is that the so-called emerging economies, particularly China, Russia, Brazil and India and Turkey have in fact emerged and that their true international potential is just about to hit western production companies like a “tsunami". Yes, the world has been here before with the emergence of the Japanese multi-nationals in the 1960s that caused a structural adjustment in “mature" economies such as that of the United Kingdom. Think of four or five Japans and you will get some idea of the scale of international change that the authors are taking about. India with an antiquated physical infrastructure is growing at 8% per annum. Think what its production will be when its investment in roads and power are completed. Even within the existing context, Indian firms are gearing up with energy and imagination to take on the world. India is not alone in this respect. In page after page the authors provide examples of how new multinationals from these countries are making a significant mark by being cheaper and quicker than established multinationals.

These new companies are exploiting a number of features of their domestic economies but are also drawn in to thinking about international conditions. Cheap labor together with the development of labor-intensive production technologies give a big competitive edge. It helps to be located also in economies such as Russia or Brazil where there are abundant natural resources as well as highly competitive sources of capital equipment. The authors put it thus: “So the first struggle of globality— where you’re competing with every company, everywhere, that has access, just as you do to virtually everything—is to relentlessly drive towards the “global low cost" (no longer just the “China price") for your business or industry" (page 58). Or the alternative is to find a high-quality differentiation. The recommended policies in this global drive are justified by numerous examples from international firms in the west and in the emergent parts of the world.

In many parts of the world, the right kind of labor is scarce and this is true of India and China as it is of the United States. Those companies that engage with “globality" no longer think in static terms about the labor market opportunities but in dynamic terms. They ask what products can be produced in which localities given resource availability. But they then go on to recruit and develop labor forces for “rapid growth" Companies in India are becoming less interested in paper qualifications and more interested in a candidate’s capacity to learn. ICICI bank in India has an effective and intensive training course in its own management institutes across India to get the talent that it requires. The potential is enormous as companies bypass quality and capacity problems within the established educational system. The “who" of the labor-market internationally is just as important in the context of “globality" as “how to produce'.

The new message of this book is that business producers need to rethink how they look at the international economy. Think global supply chain. Think of understating other markets rather than engaging in a costly learning experience. Think of learning from the new comers as they make sense of globality. The model of international business has gone on being modified during the last hundred years. This has tended to happen slowly in the past. A company like IBM has had to waken up to global changes and fundamentally rethink its business model. This book has a massive number of illustrations of how companies in India or China or Turkey are engaged in a process of forward looking and continuous adaptation, innovation and change in business practices. Western companies need to define their “future global shape' and rethink what they are and who they are and how they are and where.

We are in a world in which the political processes have not yet entirely caught up with the emergent business models and implications. This is a book for those who need to think about waking up to the global challenges rather than spending their time seeking protectionism and isolation. It is an enthusiastic book and one that supplies masses of examples. What if the world changes again and markets start to close down or regionalism becomes a basis for economic discrimination? This is not a question contemplated by the authors.