African Entrepreneurship Record

Chapter 1065: Chapter 74: Advancing Side by Side

Rhein City.

The fact that Iringa City can anticipate market demand means that other cities in East Africa, especially those with similar, less obvious advantages, like Iringa City, can also do so.

The exploration of economic development by these cities and regions will be compiled into reports that converge at the political center of East Africa, Rhein City, providing the East Africa Central Government with more experience and data to adjust the national economy as needed.

Ernst: ”In recent years, cities including Maputo and Iringa have been actively promoting the transformation of industrial development strategies to adapt to the times. This has significant reference value for our small and medium-sized cities and non-resource-based cities. Therefore, breaking conventional thinking is crucial for urban development. We must actively adopt opinions that are conducive to economic development and make corresponding arrangements.”

The formulation of development strategies by Iringa City, to some extent, also reflects the flexibility of East Africa’s economic development.

Although East Africa is a planned economy country, it is not entirely planned, especially in the agricultural sector, which is most evident. Despite efforts to vigorously develop heavy industries after the 1990s, this does not mean East Africa ignores agriculture and light industries.

Until the end of the First Five-Year Plan, agriculture was one of the primary sources of income for East African countries. Before the 1990s, developing agriculture was East Africa’s fundamental national policy and was genuinely the foundation of the nation.

After all, just to obtain a larger population, agriculture must serve as a basic guarantee. Thus, East Africa’s grain output climbed year after year, and its population reached an astounding 80 million at the turn of the century.

By 1905, the total agricultural output value in East Africa still accounted for more than 60%, indicating a significant distance from industrialization. Therefore, East Africa is still an agricultural country, albeit slightly stronger than typical agricultural countries, half-industrialized.

To ensure the stability of the main source of national income and address the pressure of population growth, East Africa will not undervalue the development of agriculture.

As for light industries, East Africa’s most notable weak point is not entirely caused by East Africa’s economic system but stems from colonial times when light industries were inherently inadequate. Thus, even though light industries in East Africa are developing relatively slowly in the national industry, they are making the most progress.

This is why East Africa’s planned economy fundamentally differs from the Soviet Union. In the first two Five-Year Plans, the Soviet Union invested more than 80% of total investment in heavy industries, while East Africa invested less than 40%. Including light industries, East Africa’s industrial investment only reached a level slightly above 50%.

This is the primary reason why the effects of East Africa’s first two Five-Year Plans were noticeably less prominent than the Soviet Union, but clearly, East Africa’s industrial structure development would not be top-heavy like the Soviet Union.

Ernst continued: ”During the Second Five-Year Plan period, there are significant differences in our country’s light and heavy industrial development. The central government and large state-owned enterprises are active in heavy industry investment, while local enterprises excel in light industrial development. The typical characteristic is that national investment is concentrated on enterprises above a certain scale, whereas localities are keen on establishing small and medium-sized enterprises, primarily light industries or basic processing industries.”

”The agricultural sector is more flexible because agriculture is not conducive to planned execution, as it is easily affected by various natural disasters. The conditions for developing agriculture differ across regions, leading to unstable agricultural output, making agricultural management more prone to guidance rather than rigid instructions.”

”Additionally, sectors like services, including healthcare, education, finance, catering, and transportation, occupy important places in national construction, though they are also the most easily overlooked in our country and industries.”

The tertiary industry, namely services, currently struggles to compete with the industrial sector. However, East Africa’s specific service industry investment situation requires specific analysis. For instance, healthcare, education, and transportation have developed rapidly over the years, while finance, catering, and entertainment have progressed more slowly.

Although East Africa’s industrial development is relatively fast, it is not particularly outstanding compared to other countries and regions, especially compared to the United States and Germany. In agriculture and services, East Africa compares with other countries as having its respective strengths and weaknesses.

Of course, during the Second Five-Year Plan period, besides normal industries, East Africa’s national defense industrial spending has grown rapidly, particularly after the completion of the Perseverance Battleship. Over the next decade, East Africa’s maritime military strength will enter a stage of rapid development.

According to the plan, after this round of naval expansion, East Africa will further consolidate its position as the leading military power on the Indian Ocean coast, forming an absolute advantage over all Indian Ocean countries and regions, including India.

Ernst: ”Our country’s economic development model can be said to have no temporary reference object worldwide, so experiencing ups and downs and difficulties in economic development is completely understandable. Even industrial countries in Europe and America face difficulties like economic crises, so encountering various problems during our economic development is not unexpected.”

”Solving these problems is the key, not hiding or ignoring them. During economic prosperity, many contradictions and issues will be overshadowed by the economic boom, which is something we need to pay attention to.”

”Although the national economy is a chess game, the same principle may not apply when it comes to local economic development. After all, each region has its characteristics. What we need to do is reconcile the differences between regional and national economies to facilitate more efficient national economic development.”

Ernst’s statement also implies support for Iringa City to experiment with regional economic development. If the results are good, the development experience of Iringa City will be further promoted.

In fact, this experimental economic development model is not an isolated case in East Africa, as Maputo City previously developed this way.

Today, Maputo City has become the fastest-growing city in Hansa Province, with its economic volume rapidly approaching that of the provincial capital, New Hamburg Port City.

Of course, Maputo City’s economic development is not as representative as Iringa City’s, because Maputo City’s conditions are better. Maputo City is one of East Africa’s important coastal cities, located at the intersection of the Mozambique Plain and southern East Africa, which Iringa City does not possess.

”Under the planned economy model, not all industries are suitable for planned formats. To avoid economic stagnation, we must give localities sufficient autonomy for development. Of course, some issues on the red line still need to be coordinated under central leadership to achieve economic development by focusing on major matters and granting leeway on minor ones, thus promoting the vitality of our national economy.”

The original intent of Ernst implementing a planned economy in East Africa was to accelerate East Africa’s industrialization, not viewing the planned economy as a ”magic cure” for economic development, which also relates to East Africa’s national conditions.

Through compulsory education, East Africa has significantly improved its citizens’ basic qualities and trained numerous talents adapted to industrial development, providing a basis for cautiously initiating a planned economy.

In the previous life, many African countries followed the Soviet Union model, but when mimicking Soviet experiences, the results were chaotic, not only failing to achieve national industrialization but leading to a nationwide economic mess. To be frank, the general prenatal education standard in previous life Africa meant that they could not conduct normal economic activities.

Having them manage a country according to tribal governance models was already the limit for many African countries, and leaders able to maintain overall social stability could even be considered ”wise rulers.”

Ernst continued: ”While developing our country’s industries, we cannot overlook the development of other sectors. Though the role of industries in the national economy is increasing day by day, a normal country must manage all aspects, which is why during the Second Five-Year Plan period, we actively adjusted the comprehensive development of national industries. East Africa wants to become a world power, although developing industries is crucial, solely focusing on industries may lead to deficiencies.”

”Thus, pursuing East Africa’s economic development prosperity necessitates future diversification and simultaneous advancement across various industries. Of course, at the current stage, our capacity is limited, so focusing on developing specific fields is understandable. Nonetheless, as economic development progresses, we must eventually address the previous shortcomings.”