By Guy Pfeffermann As every gardener knows, plants flourish when they get exactly the amount of water they require. A sudden downpour is wasted: The ground cannot absorb it, and the runoff erodes the soil. The same goes with funding development in Africa and other poor regions. Too little money, whether domestic savings, export revenues, or aid to governments and nongovernmental organizations (NGOs), hampers progress. But too much is bad as well. Like plants, national economies can absorb only a certain flow of money usefully.
One of the often-overlooked determinants of absorptive capacity is management and business talent. Sadly, most of Africa's health organizations and local NGOs -- many of which receive millions in aid -- suffer from a lack of management skills. According to news reports, a key partner in the Global Fund to Fight HIV-AIDS, Malaria & Tuberculosis suspended operations in Uganda in August because some funding had gone astray. This was in part the result of corruption, but it also was due to a shortage of local accountants able to book foreign exchange receipts correctly.
This dearth of management training also hinders micro, small, and midsize businesses. These are the largest source of jobs in most developing countries. Yet in Africa few of them ever grow into larger companies. Research conducted in East Africa shows that the one factor that is strongly connected to the growth of small companies is whether owners or managers have university training. This finding cuts across ethnic differences and is true for locals, persons of Indian descent, or expatriates. In China, in contrast, most owner-managers of small companies have had some access to higher education. In short, business training pays off immeasurably.
The Report of the Commission for Africa, which British Prime Minister Tony Blair submitted to the Group of Eight last July, rightly flags management weakness in nearly every sector: water, health, transportation, and education. Yet nowhere does the report mention the need to strengthen local management schools. Leaving out South Africa, in all of the rest of sub-Saharan Africa -- with one-tenth of the world's population -- there are only a dozen small, high-quality business schools. No one expects any of these to become the next Harvard Business School. Rather, these schools aspire to provide basic management skills at affordable costs. But they can't supply business, governments, or NGOs with even a fraction of the skilled staff they need.
Why not simply "outsource" such training? Sending African students to foreign management schools all too often results in a brain drain, because students take jobs abroad after graduation. The only viable alternative is to strengthen the few promising management schools in Africa.
One reason aid donors have not focused on the acute shortage of skilled managers may be that international development goals have not stressed higher education. That's changing: The Blair report urges aid donors to help revive African universities, and four of the largest U.S. foundations (Ford, Rockefeller, MacArthur, and Carnegie) have started the Partnership for Higher Education in Africa. Also, the World Bank's International Finance Corp. has piloted the Global Business School Network to help develop African management schools.
A second reason is that many aid agencies abide by the wishes of African governments when making grants. Since many of the best management schools are private, governments are unlikely to include them in their "menus."
But perhaps the most important reason for neglect has to do with the way donors, whether governments or foundations, tend to view business schools. Business school students are not among Africa's poorest -- indeed, most are middle-class. This alone disqualifies schools from receiving most financial support -- even though, in the absence of any endowment, these schools all struggle for resources. If instead donors saw business schools for what they are -- a desperately needed way to improve health-care delivery, NGO management, and small-business operations -- maybe they would include them in the aid menu.
In October, the deans and directors of 22 African business schools from 10 countries met in Lagos, Nigeria, to establish the Association of African Business Schools. One of their objectives was to draw the attention of donors to the importance of management education in Africa's development. Isn't it time these fledgling schools received a helping hand?
Guy Pfeffermann is director of the Global Business School Network of the International Finance Corp., a member of the World Bank Group