What Can Africa Learn From the Progress Made by Vietnam?

Economy & sustainability

What Can Africa Learn From the Progress Made by Vietnam?

Commentary
Posted on: 13th April 2022
Henry Musa Kpaka
Senior Advisor, Sierra Leone

After 40 years of diplomatic relations between Vietnam and Sierra Leone, President Julius Maada Bio became the first sitting Sierra Leonean president to make a state visit to the country. Bio’s visit is one of many made in the past few years by African leaders seeking to strengthen ties.

With the ascendency of China in the region, and its increasing sphere of economic influence on the African continent, what does Vietnam have to offer to Sierra Leone, and to Africa more widely? President Bio’s discussions with key leaders – including President Nguyen Xuan Phuc, Prime Minister Pham Minh Chinh and Chairman of the National Assembly Vuong Dinh Hue, as well as provincial leaders in the Mekong Delta and representatives from government agencies and institutions, and the Vietnamese private sector – offer a glimpse of how Vietnam wants to engage Africa, and what countries like Sierra Leone can gain from such engagement.

A little over 30 years ago Vietnam shared similar challenges to those experienced by much of sub-Saharan Africa. However, despite the country’s colonial history under China, France and Japan and the catastrophic consequences of the Vietnam war, Vietnam has emerged a resilient country with huge gains towards prosperity for its people. Vietnam’s economic performance in the past three decades is second only to China’s. In this period, the country’s economy grew at an average rate of 7 per cent per annum. It has huge foreign direct investment (FDI) flows, and consistently produces products to sell to the rest of the world, with export value accounting for 201 per cent of GDP in 2020. This growth means that the country essentially eliminated extreme poverty. The poverty headcount ratio (as a percent of population) was 52.3 per cent in 1992, and 1.8 per cent in 2018. Per capita income also grew rapidly from $110 in 1991 to $2,650 in 2020, while inequality was kept in check. The infant mortality rate dropped from 37.6 per 1000 live births in 1990 to 16.7 in 2020. Life expectancy in 2019 stood at 79.3 years compared with 59 years in 1960

As impressive as these statistics are, driving through the green rice fields and fish farms along the paved roads from An Giang Province to Ho Chi Minh City in the Mekong Delta (the main agriculture production zone of the country), you see a clear picture of the transformation happening in real time in these rural areas. Here, it is agriculture that is driving the transformation. A visit to a 600 hectare mechanised fish farm (purportedly the largest in the world) and a fish-processing factory linked to it that employs 6000 workers demonstrates the scale and end-to-end manner of production. A striking similarity between this region and much of Africa in terms of agriculture, is that farm sizes are small – on average about 1 hectare per farm household. Despite this, close to 95 per cent of rice cultivation in the Mekong Delta is mechanised because farmers are organised into cooperatives. Average rice yields in these areas range from 6 to 8 metric tonnes per hectare. The irrigation infrastructure allows for multiple cropping cycles per year, and the Mekong Delta consequently produces over 50 per cent of the rice consumed in the country and more than 90 per cent of what is exported.

Most countries in Africa lag behind Vietnam on the majority of these development indicators. Even countries like Ghana, Kenya and Côte d’Ivoire that are in the same income category as Vietnam perform worse on all these indicators. While individual countries will have to forge their own paths to prosperity, African leaders can draw inspiration from Vietnam and learn from what they got right and what they got wrong.

What Did Vietnam Get Right and Where Did They Improve?

Many books have been written about the reasons for Vietnam’s success over the past three decades. But in our discussions with national and regional leaders, experts from government agencies and the private sector, four key themes stood out:

Strong leadership and perseverance: A common theme each of these stakeholders drove home is that the transformation happening in Vietnam seemed unreachable when the country launched its Doi Moi (Renovation) reforms in 1986. These reforms centred on rescuing the economy from the failures of central planning and isolationism adopted after unification in 1975 and transforming the country into a more market-oriented trading nation. They pointed to strong political will and a leadership dedicated to using prosperity to unify the country.

State and private sector working together: The state and the private sector worked together to drive growth and unleash prosperity. Although Vietnam opened up its economy, the state and state-owned enterprises continued to be dominant in the early years of the reform. The broader private sector became a beneficiary of economic growth and was able to take risks as the government had paved the way for foreign investment. There was a clear feedback and feed-forward mechanism between the private sector and the government. 

Experimentation and willingness to try new policies within a stable political system: The leaders emphasised the importance of policy experimentation. Vietnam undoubtedly benefited from the advantages of late development, but the country has invested time and money to experiment and learn which policies are successful. As the country benefitted from a stable political system, policymakers encouraged competition between different regions of the country and piloted new ideas at the regional level so that they could work out which policies delivered better results, without taking on too much risk at the national level. Development was localised and regions played to their strengths rather than following a centralised one-size-fits-all approach.

Investing in the basics: Very early in the reforms, Vietnam recognised and invested in building its human capital: educating and training its people was paramount. The country then prioritised agriculture as a means of addressing food-security concerns and supported and encouraged communities to farm. Rice, the main staple, became the central pillar of agriculture production. The country invested heavily in rice research, adopted new technologies and transformed itself from an importer of rice to the second-largest rice exporter in the world today.

 

What’s Different about Vietnam’s Offer?

Vietnam’s approach to Africa will continue to evolve and will probably be tailored to fit each African country it engages with. However, it is unlikely at this stage that Vietnam will become another source of financial aid or loans for African governments. Both President Phuc and Prime Minister Chinh emphasised to President Bio that what Vietnam is putting on the table includes a coordination mechanism for new market opportunities for Vietnam and African countries and the sharing of information, technical advice and technology transfer. In essence, the model being proposed for engagement is to learn together with Vietnam.

While China can also offer technical expertise as part of their engagement with the continent, Beijing takes a different approach. China is Africa’s largest creditor, providing loans used to finance large-scale infrastructure projects such as roads, bridges, ports and so on. Many of these investments aim to facilitate China’s key economic interest on the continent – the acquisition of commodities. Technology transfer is limited or non-existent in these engagements.

The advantage of engaging with Vietnam based on this type of model is that the country still has growth ambitions. It aims to be an upper-middle-income country by 2030 and a high-income country by 2045. Vietnam is keenly aware of the middle-income trap, and there are signs that it is well on the way to achieving its income-status goal. Advances in innovation and technology are picking up pace: it is diversifying its economy and export options, and continued investment in human capital has been central to its growth strategy. In the agriculture sector, for instance, because the profit margins in production are becoming narrower, producers are now shifting to high-value rice products, such as fragrant jasmine rice and other niche varieties. Investment in research, innovation and mechanisation continues to boost yields, so that production levels have remained the same even as agricultural land is being diverted to other high-value crops and aquaculture. Vietnam seems ready to share technologies – especially in the agriculture sector – to help Africa improve productivity .

How Can Africa Leverage This Offer?          

The implications of Vietnam’s success will probably differ for each country on the continent. Although Africa has received a significant amount of aid money, in many countries progress has been slow on the main challenges they face. We are now witnessing the Belt and Road Initiative unfold to a mixed reception, but a focus on technology transfer and technical-expertise-centred development can complement these existing ties.

Countries like Sierra Leone can transform bilateral ties with Vietnam into tripartite relationships, where Western donor funds or even Chinese investments are used to finance joint projects with Vietnamese experts. To take full advantage of the relationship, business-to-business engagements should be encouraged as much as government-to-government collaboration.

The Tony Blair Institute for Global Change team in Sierra Leone supported President Bio and his delegation to make a successful state visit to Vietnam. President Bio made agriculture the main pillar of collaboration between Vietnam and Sierra Leone and he also wanted to see the private sector in Sierra Leone learn from their counterparts in Vietnam, especially in the rice value chain and aquaculture. To help the president achieve his objective, the TBI team worked with several ministries to draft memoranda of understanding (MOUs) with their Vietnamese counterparts and organised a business forum in Hanoi for both countries’ private sectors to share ideas and network. The visit was planned so that the President and his delegation could engage leaders at the national and regional levels and could see agriculture fields and processing factories for rice and fish, as well as visit technology parks. As a result, the President and his delegation witnessed first-hand the progress being made in the country. 

During the visit, the two Presidents oversaw the signing of three MOUs on general economic cooperation, agriculture and aquaculture. These MOUs will form the basis of knowledge exchange and technology transfer in the two sectors. Vietnam will share germplasm and provide experts to boost rice productivity and initiate commercial fish farming. The private sector also signed an agreement to facilitate export-import of various commodities, as well as attracting interest in real-estate investment in Sierra Leone.

Sierra Leone and Vietnam are off to a good start. Their leaders are eager to transform these MOUs into action and will be setting up a coordination mechanism to facilitate and foster this relationship.

Ultimately, Sierra Leone and other African countries will have to chart their own paths, yet Vietnam’s experience will serve as an inspiration and will doubtless introduce ideas that can trigger positive change throughout the continent.

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