The complex nature of society, contemporary policy problems, and the rapid advances in digitization significantly limit the ability of traditional policy devices and analytical paradigms to arrive at optimal policy solutions. This concluding chapter draws on lessons from several jurisdictions for Africa's development. To achieve the Africa of our dreams, policy reforms are needed to diversify the structure of production for long-term economic growth. In the same vein, the leapfrog effect has implications for fast-tracking the continent's development journey. Successful policy innovation requires nuanced policy paradigms, models, and devices under an empirical umbrella that optimizes the opportunities presented by regional economic integration under the AfCFTA. A one-size-fits-all model will not work.
GDP growth is not enough. Growth must be felt in the lives of people! Nobody eats GDP.
― Akinwumi Adesina
POLICY CAPACITY is a core fabric of public policymaking. The highly complex nature of society, contemporary policy problems, and the rapid advances in digitization significantly limit the ability of traditional policy devices and analytical paradigms to help in choosing the best policy among a set of alternatives. This has implications for the formulation and implementation of effective policies.
As discussed in much of this book, while public policy scholars and practitioners have varying opinions on the threshold of governance and institutional quality required as preconditions for policy capacity to aid the public policy innovation process, historical and structural issues in the African context – e.g., initial conditions, informality, extreme poverty, conflicts, colonial institutional vestiges, and highly fragmented economies – add an additional layer of importance which merits attention in the agenda-setting process.
Much like how cause-and-effect analysis is useful in understanding how different parts and sequences of a system interact with each other over time, the discussion in the preceding chapters has shown that policy capacity is important in the analysis of capacity deficit and how this, in turn, results in sub-optimal outcomes that ultimately trigger policy failures. I discuss extensively in this monograph that policy diffusion is the process by which a policy spreads once it is created. Another critical element of the policy innovation discourse is policy reinvention: the process by which a policy is changed by those who adopt it.
The theoretical underpinnings of institutionalism and the political economy dictates so far in this analysis establish one fact: public-private policy partnerships offer an institutional and alternative governance paradigm that balances the traditional state and market ramifications that often limit allocative efficiency and delivery of conventional social services. This is a new hybrid form of institutionalism that serves as an alternative governance model to central planning and markets in the delivery of public goods and services.
Transaction costs, property rights, governance, institutions, contracts, bounded rationality, and social capital are all fundamental to the new institutional economics paradigm. Chapter 3 of this book establishes the theoretical foundation of governance as the core of the PPP and public-private policy partnerships analysis. Since transaction costs are essentially about harnessing the best of the public and private sectors – through learning from the vantage point of others – the preferences of the individuals and actors involved in the policy diffusion process must be crystallized within the appropriate institutional structures.
Under the introductory chapter, I explain how group preferences in societies drive institutional outcomes based on allocative efficiency ramifications. In the policy arena, innovation reduces transaction costs by reducing risks and creating positive externalities among key stakeholders.
In the context of market dynamics, the capitalist mode of wealth creation has exacerbated income inequality and the climate crisis for decades now, resulting in populism and deep feelings of discontent. Clearly, capitalism is at a crossroads, and to avert a breakdown of the political and socioeconomic systems, fixing the status quo by addressing the huge and growing imbalances between the public and private sectors is long overdue. In the face of recent trends in the social justice movement, concerns on the climate crisis, the ongoing debate on ESG, the future of capitalism, and the governance dimension, these issues resonate.
The pitfalls of capitalism are many, but its unprecedented ability to create wealth through the invisible hand is incontrovertible. This implies there is a middle ground, and based on the discussion so far, a firm grasp of policy innovation is key to addressing some of the pitfalls of modern capitalism. In the absence of private property rights, allocative efficiency— efficiency in the distribution of factors of production across sectors— becomes difficult to achieve.
Again, transaction costs lie at the heart of the policy innovation discourse, and taken together, this discussion can be a useful interpretive lens – that guides reflection and action – from which African countries can identify specific policies in need of reform and the appropriate solutions that can help improve governance performance – since this permeates all other dimensions of public-private policy partnerships.