A telling mental image that springs to mind when the Third World is mentioned is that of gangly, pot-bellied minors tramping through the muddy filth of ramshackle hamlets, a rural backwater overrun by drought and disease. For centuries this haunting spectre has been the gruesome reality for 1.2 billion of earth’s humanity living in Sub-Saharan Africa, South America, and parts of Eastern Europe and Asia. The global response to eliminating this malignancy of squalor has been to champion the cause of private enterprise as the primal motivator of sustainable economic growth and self-sufficiency.

The seductive ideology of marketization, or the use of market-based solutions to resolve socio-political or economic maladies, has captured the imagination of many a nation desperate to divest itself of under-development, motivated further by the advice of financial institutions like the World Bank and the IMF. That these bodies should endorse such a capital-oriented viewpoint is fairly obvious, but there is some scepticism as to the effectiveness of the various aspects of marketization practised, namely deregulation, liberalisation and privatisation. The concept itself has held sway in many econometric schools of thought from the ‘invisible hand’ of Adam Smith to the much-extolled Keynesian economics, finding credence even in realms of political philosophy where Hobbesian proselytes maintain that man is inherently and incurably selfish, less concerned with the common good except insofar as it serves his interests. It is quite the irony, though, that the solution reached by Thomas Hobbes (1588-1679) to counteract the consequent conflict of individual interests would be absolute feudalism, especially since feudalism itself was on the decline and giving way to capitalist tendencies in the 16th century, the period during which he lived. As it turns out, the anarchy he had anticipated has never really actualised due to the now well-known dynamics of spontaneous order. First expounded by Bernard de Mandeville in his “Fable of the Bees” (1714)1, it theorises that when the personal pursuits of individuals make them prosper, society permits their activities and encourages their emulation. Just as equally, fruitless pursuits are discouraged, slowly building a pattern of collective behaviour, or social order, conveniently attained by allowing individuals to pursue their own ends and by so doing, meet the needs of others. Thus the ideological defence for ‘dealership economies’ was established, and has been fiercely advocated by Western democracies to the straggling sovereignties of the Third World ever since, particularly in recent times with the agency of globalisation.

Nonetheless, the verdant fields of idealism rarely withstand the scorching singes of reality very well, and such economic restructuring as the entrenchment of private enterprise requires has proved successful largely where the bureaucratic tools ensuring a transparent market system are available. This is evident in regions of macroeconomic cooperation like the OECD and the EU, where the absorption of the east-European countries of Poland and the Czech Republic immediately reflected positively on their GDP and general quality of life among the populace. Other countries who attempted such an economic overhaul have had to grapple with the marked expensiveness of such a convoluted process, which in turn diminishes the prospects of competition on a level playing field and has resulted in the emergence of corporate oligarchies, a trend discernible in Mexico, Brazil and countries in Africa like Nigeria. The telecommunications market in Nigeria, for instance, is split three ways between two multinational concerns and a substantially-backed indigenous enterprise, primarily because the need for profit prevented the Federal Government from proffering licences at rates other potential competitors can afford. Furthermore, to meet the tremendous capex sacrificed to secure their licences, these companies are offering their services at rates averaging 50 cents/min call-time, that in a country where people thrive under a dollar daily. Nor does this string of market inequities end in telecommunications. Further encouraged to drastically truncate on public spending, the Federal Government is relinquishing more public enterprises in the sectors of power and water supply, usually in notoriously obese conditions, into private hands, whose penchant for profit has entailed that several livelihoods daily face the chopping block of downsizing. The ones left are dispossessed of the accustomed job securities of gratuity and pension, and the hurdles to secure employment are now raised to Herculean standards. Ultimately, competition is stifled, profiteering bolstered and the gaping chasm between fending hands and famished mouths is further widened, defeating the purpose for which privatisation was originally intended. The practice of deregulation fares little better, as the process of removing statutory trade restrictions have, rather than increase the level of competitiveness, placed the market under the control of the stronger private corporations and spawned de facto market monopolies. It created the software giant Microsoft, and even when state intervention splintered its corporate mass to prevent its exclusive dominance of the software market, the effect was like a superficial sloughing exercise and it bounced right back. If these antecedents are to be presumed precedents, then the prospect of eradicating poverty by equitable distribution of wealth generated via the path of private enterprise is bleak indeed.

Proponents may argue that the Microsoft illustration in fact validates the flexibility in the practice of marketization within liberal economies like the United States, where the tactful use of state control curbs the potential abuse of a free market scenario, protecting the rights of consumers and weak competition. In other words, if bureaucratic intervention is shackled strictly to consumer security and regulating competition, forging a fair, impersonal economy system is possible. This thinking, postulated by Nobel Laureate and economist Douglass North2, however underestimates the overarching reach of the state in system control; indeed, its claim of the system’s ability to shackle state arbitrariness is discounted daily, even in so-called established free-market economies of the West. The constant tussle between the USA and China over cheap imports from the latter due to its undervalued Yuan (a squabble that delayed China’s entry into the WTO), or the steel stand-off between Europe and the US, to recall an earlier scenario, prompted some string-pulling and trade-throttling to protect the domestic industries in America and exemplifies the wishful bent of this idealistic position. The sobering knowledge garnered from this cursory overview is that private enterprise can veritably multiply the rate at which wealth is generated, but presently lacks a proven means of equitable allocation of resource; hence the material extremes of profligate opulence and pernicious penury remain the antithetical bedfellows of our economic reality. It may be posited that socialism and eventual communism sought to bridge this divide, albeit to deplorable effect, as historic annals recount. This paper explores however a methodology through which the avenue of private enterprise may negotiate this seemingly intractable quagmire, by means of a daring but doubtlessly effective move – acquiring the arena of academia.

More specifically, what is proposed herein is a major-scale investment in technical education. At first glance this may seem chartered grounds, as several privately owned institutions of learning already exist around the world. Furthermore, the third world is not exactly teeming with what would be the targeted demographic, i.e. wards of affluent patrons, so venturing their proliferated establishment in developing countries also appears an ill-advised incongruity. But this tier of learning, which focuses on specialization of technological skills by its students in various fields such as machinery workmanship, mobile telephony, business management, electrical/electronic engineering, food processing and the like, not only equips its graduates with the requisite expertise to be easefully assimilated into knowledge-specific companies or industries, but also enables them pursue entrepreneurship using their expertise in these disciplines. Thus by providing qualitative technical education in developing countries, private concerns are simultaneously ensuring a steady string of direly needed professional recruits into their staffed rank and file, hence saving on employee orientation and re-training courses, as well as enabling an early conversion of academic certificates into paying vocations.

Undertaking the setting up of qualitative technical schools is an expensive prospect, however, more so due to cost of installing workshop machinery, laboratory equipment, research modules, pilot stations and other training exigencies. It is thus advisable that only multinationals or cooperatives engage this proposition. Companies most preferred are multinationals with considerable product stake in the domestic markets of these countries that will thus serve as credible drivers of the venture and equally motivate associated banks to proffer their services. Examples may be drawn from the sectors of cellular technology, food, refreshment and household electronics, namely Nokia, Samsung, Sony, Phillip, Coca-Cola, Guinness and Nestle, companies with instantly recognisable trademarks whose products are used the world over. To generate requisite capital for the initiative, a Technical Training Trust Fund (TTTF) will be put in place and primarily financed by a float of company stock conducted every three years. This fund will also subsidize tuition when students enrol by a marginal requirement that will prevent fee values from exceeding the cost of normal secondary school tuition within the given area of establishment. Business management and economics will feature as compulsory courses in the school curriculum, commenced from the first year. Prior to graduation, students will be instructed to submit a final-year business bid detailing what entrepreneurial aspirations they envisage to pursue after graduation and how they intend to bring these aspirations to commercial fruition, citing practical merits and potential pitfalls of their proposals. Selecting submissions noted for the exhibition of foresight, feasibility and sound business acumen, the TTTF will make available loans to their authors upon graduation, enabling them set up small credit establishments that best realise their venture objectives and exploit the skills acquired from their technical training. On the other hand, promising graduates who opt to further should be offered scholarships to the tertiary level, appended with a 5-year staff enlistment caveat after studies are concluded.

The students involved in the loan scheme will be required to repay their loans within a stipulated timeframe, and where repayment is met within schedule, the students will be entitled to what will be referred to as a Post Study Share (PSS) Option, which offers them the opportunity to purchase a limited number of company stock at half unitary value. Half the repaid loan is reserved to support the TTTF. However, these shares shall be annotated as common stock, with only subsequent purchases if allowed varying between common and preferred stock. Preferred stock, sometimes called preference shares, have priority over common stock in the distribution of dividends and assets, and sometime have enhanced voting rights such as the ability to veto mergers or acquisitions or the right of first refusal when new shares are issued (i.e. the holder of the preferred stock can buy as much as they want before the stock is offered to others)3. Those who default on prompt repayment will forfeit the PSS Option and have their businesses repossessed and liquidated by the banks coordinating this loan initiative.

This loan strategy is a trendsetter on many levels, but it does have a precedent in the informal institution of layman apprenticeships already practised in most third-world countries. In this system, children who desire to pursue a trade pay to be apprentices and serve under their masters without remuneration for between 5 to15 years, at the end of which they are sent off with substantial venture capital. Layman apprenticeships usually are the only form by which the drive of private enterprise has been perpetuated in developing countries, and while the process has been for the most part successful, its relatively primitive nature and limitation in scope required the invention of a more progressive, result-oriented variant as described in the foregone paragraphs. This variant, which shall be termed the Support for Technical EntrepreneurshiPS (STEPS) programme, gives a boost to the private sector in a myriad of unique ways. It provides an agency for directly investing in the fostering of medium credit businesses without, for instance, risking the channelling of funds through the questionable conduits of government parastatals. It offers genuine opportunities for trade multinationals to contribute in fulfilling the Millennium Development Goals (MDG) of eradicating poverty and hunger by concurrently promoting the advancement of literacy and engendering domestic resource mobilization within developing countries. It encourages capacity building of their host economies and stimulates the drive for entrepreneurship, which is crucial to sustainable development. The STEPS programme also accrues a binge of benefits for the investors. Besides free advertising, it elevates the corporate image of these companies and procures possibilities for markedly enhancing their market credibility and stock valuation. It also offers an opportunity for significant capital base expansion through the PSS Option and increased patronage of company merchandise, a vogue that doubtlessly will motivate the competition to adopt the programme and ultimately assure its longevity. But perhaps more importantly, it enables these companies shed their excess resource to the benefit of the neediest places of the world.

STEPS is hardly risk-free, though, and among the questions which will be posed as to its feasibility include the issue of possible prohibitive state restrictions, coordination difficulties, candidate (country) selection for pilot studies, and, most importantly, the willingness of these companies to assume the onus of STEPS instigators. Beginning with the last-mentioned concern, it would serve the interests of the United Nations’ bureaus on education and development, namely UNESCO and UNDP, to arrange the mandatory solicitous liaisons with these potential financiers from the private sector, given that the targets of the programme dovetail with their stated objectives and the overall aims of the MDG. Placing them at the helms of programme coordination also conveniently mitigates other complications regarding candidate selection, as they already possess the necessary data to sort out and identify what countries qualify for pilot studies and the skilled manpower to conduct them. The impediment of undesirable state interventions however tend to be very arduous to remove, and immense international pressure must be brought to bear if this is to be surmounted. It is especially critical to involve an institution like the IMF in the advocacy endeavour as well as in monetary leveraging of the TTTF, since it already serves an authoritative advisory role on finance in most of the countries affected. It simply will not do for both parties to be at ideological loggerheads as has obtained in the past4. With a synergised approach, the host states will be better persuaded to embrace the initiative and soft-pedal on imposing opportunistic levies or demanding undue trade concessions which might discourage the financiers and scuttle the programme before it even begins. It must be realised though that some barriers may prove impossible to scale. Isolationist nations like Zimbabwe may be counted on to vigorously oppose such ‘foreign intrusions’ as is proposed. Another issue that might also prove a pickle concerns the sales of company stock to sustain the TTTF, whether to the enterprising school leavers or the public, a prospect some partners may find unsavoury to contemplate either due to the nature of their corporate framework or for fear of potentially devaluing their asset base or stock value. Append that to the condition of tuition subsidies and the fact that the loans are to be repaid sans interest, and one gets a whole cavalcade of unresolved complexities without ready answers. Research to fully surmise all the angles is by no means exhausted yet.

In the end, the range of success will depend on how well we cooperate, and it is ardently anticipated that whatever course of action taken shall attest to the triumph of the human spirit by the concerted annihilation of desultory deprivation in the Third World.

REFERENCES

1. Ashford, N., “Core Concepts: Spontaneous Order”, available at http://aworldconnected.org/article.php/870.html

2. Philips, L., “Core Concepts: Institutions Matter”, available at http://aworldconnected.org/article.php/932.html

3. “Stock”, available at http://en.wikipedia.org/wiki/stock

4. “Investing in Development: A Practical Plan to Achieve the Millennium Development Goals,” UN Millennium Project 2005. Overview. 2005. p.36, available at http://www.unmillenniumproject.org/reports/fullreport.htm.