EA intergration:From tiger economies to Lion economies

When African nations blame colonialism for all their ills, they should look at the Asian Tiger economies of the far-east; they too were colonised, oppressed, exploited, and yet they turned matters around.

When African nations blame colonialism for all their ills, they should look at the Asian Tiger economies of the far-east; they too were colonised, oppressed, exploited, and yet they turned matters around.

None is more inspiring than Singapore, a nation that stands as an example to emerging nations because they were poorer than Rwanda 40 years ago, with no resources, limited land, and a small population with low skills.

Singapore took advantage of its strategic position in the world, it is on the Malacca straits; one of three trade bottlenecks in the world, along with the Suez Canal and the Panama Canal.

Singapore was able to take advantage of its position while Egypt and Panama were not; even regional powers like Malaysia and Indonesia were unable to match Singapore for growth and output.

While Egypt and Panama vied for control of the Canals, Singapore launched an export-driven economy that was intricately planned by the state.

It is founded on the dual pillars of manufacturing and finance; the two being mutually complimentary, with the financial sector funding manufacturing while saving the revenues.

A manufacturing base needs a strong financial sector to avoid leaking of capital.

The weak financial sectors of Congo were unable to, or were obstructed from accumulating revenues from minerals, and thus most of the capital ended up in Europe, and not reinvested in Congo.

Singapore might look like the ultimate capitalist machine but it had a centrally-planned economic program with heavy state investment.

They have companies that are linked to the state investment arm called Tamasek-Linked companies and these account for 60 percent of GDP.

This means that the State can channel resources towards strategically vital sectors.

The electronic component industry was developed in this way with private and state capital funnelled into a particular sector.

The citizens are obliged to save and invest in their future; these funds are invested in the Central Providence Fund, which is the ultimate source of capital for investment.

Singapore took advantage of the limitations of their neighbours; they opened rubber factories to process Malaysian raw rubber and Indonesian oil.

With no resources of their own, they were forced to import raw materials and add value to them.

Massive investments in infrastructure and education have paid off; today Singapore has a workforce of 2.96 million, and yet their turnover is $250 billion.

The per capita income is $52,000 from $245 forty years ago, but the majority of income is saved, as opposed to being consumed in the form of goods.

The government invests up to 21 percent of its budget in education and technology and thus is able to take advantage of the technological age.

In East Africa, we will have to develop in a similar way to the Tiger economies by replicating the beneficial policies that made such success possible.

While Rwanda will never have the geographical position that gives Singapore its dominant position, Singapore is the busiest port with 23 percent of global trade going through its waters.

Its main trade partners are the regional powerhouses such as Indonesia, China, Malaysia and only USA is distant geographically.

In that respect, regional cooperation is the key to success – Singapore stands on the shoulders of giants. Rwanda can refine minerals for Congo, much like Singapore refined its neighbours’ minerals – a smart investor would open smelters in Gisenyi and Cyangugu.

East Africa needs a sustained and coordinated drive towards industrialisation, but manufacturing for export is essential in developing higher standards and developing a local market for these goods.

It is the only way the lion economies will match the tiger economies. 

Ends

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