The Challenge of Structural Transformation in West Africa

Dr. Félix Fofana N’Zué

 

Dr F NZue

Development theory stipulates that for countries to develop, they have to structurally transform going from an agrarian economy to a modern one. This structural transformation was to take place in stages (Kuznets, 1966)*. Thus, socio economic development is achieved via transformation especially Structural Transformation. This transformation is a process and takes place in phases. At the initial phase it is the agricultural sector that contributes the most to country’s wealth because one has to feed its population that is continuously growing. This is phase one.

To cope with the growing population the country has to improve agricultural productivity and reduce the hardship in the agricultural sector. As productivity increases in the Agricultural sector, some production factors are expected to be reallocated to the industrial sector where their contributions become more appealing.

When that is done, the contribution of Agriculture to the country’s wealth decreases whereas that of the industrial sector increases. This is phase two of the structural transformation. For this transformation to take place, it essential that country’s human capital is properly developed and it is geared towards continuous reduction of the hardship in the agricultural sector, continuous improvement of agricultural yield and productivity. In this phase two, the country industrializes and produces goods with high technological content. The country develops value chains inherent to each agricultural produce. This process witnesses the rise of agro industries.

As the country produces more and more finite products, the need for an effective and efficient distribution and marketing mechanisms arise. The country therefore reallocates more resources to the service sector to cater for that need. This is the third phase of structural transformation. In the course of this process, the contribution of the industrial sector declines to the benefit of the service sector.

The process described above is the one followed by developed countries like France, United Kingdom, United States of America, Japan just to cite a few. These countries exhibit similar path of transformation. This is the path followed by some emerging economies i.e. Indonesia, Korea and Malaysia. The contribution of Agriculture to these countries’ wealth declined as they got richer (increased per capita income). They industrialized. Indeed, the industrial sector’s contribution to wealth rose to overtake that of the Agricultural sector. As these countries continued to grow richer the services sector has taken over from the industrial sector to become the greater contributor to the countries’ wealth.

Looking at the countries in West Africa what we observe is that, the transformation path indicated above and followed by developed and emerging economies is not the route that countries in this region are pursuing. The countries not only do not exhibit a clear transformation path, but and this is worrisome, they moved from the initial stage / phase where agriculture is the prominent contributor to wealth, to the third phase with the services sector being the prominent contributor to wealth. In so doing, they skipped the second phase of transformation which is a critical phase for a sustainable socio economic development. The second phase is where countries develop and take advantage of the value chains of agricultural products. Unfortunately, this is not what we witness in our region.

We therefore urge policy makers in West Africa to seriously reconsider their development strategies to ensure that phase two of the structural transformation process is taken care of and not skipped. It is through this phase two that the countries will seriously develop value chains with increased technological content and pave the way to sustainable development. Thus, unless a serious course of action is taken to ignite the process of proper structural transformation, the West African countries’ ambitions to climb to emerging economy status will only remain a wishful thinking.

 * Kuznets, Simon (1966), Modern Economic Growth, New Haven: Yale University Press.

The Author is the Director of the Economic Policy Analysis Unit of the ECOWAS Commission.

The views expressed in this one pager are those of the author and not the official position of the ECOWAS Commission.


 

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