Although Africa is a continent filled with natural resources which are vital for its economic growth, it is the home to the world’s poorest individuals. In alleviating its poverty, the African continent has been the major recipient of foreign aid for decades. Prominent scholars, such as Jeffrey Sachs, believe that with proper planning and funding, extreme poverty could be wiped off the Earth by 2025. This is not the case however, as financial aid received by African countries has not enabled them to graduate to a middle-income stage. Thehealth poverty action report on Africa depicts while $134 billion flows into the continent each year — predominantly in the form of loans, foreign investment and aid — $192 billion is taken out, mainly in profits made by foreign companies, tax dodging and the costs of adapting to climate change. Multinational companies in Africa have deliberately misreported the value of their imports or exports to reduce tax. The result is Africa suffers a net loss of $58 billion a year.
To date, a majority of African leaders are no longer the champions of foreign aid. Leaders, such as President Paul Kagame of Rwanda and Akufo of Ghana, have argued their citizens and other leaders to have a vision of life beyond foreign aid in Africa. Other leaders, such as President Magufuli of Tanzania, have re-worked mining, port construction and other contracts which were previously reducing income tax to the government with the essence of creating sustainable development and reduce foreign aid dependence. These African leaders have realized the way foreign nations are aiding Africa is flawed. Rather, it is Africa aiding the rest of the world.
The World Bank 2020 report, Doing Business, categorizes Africa as one of the best places to start a business. The majority of African countries have improved the reliability of power supply, reducing certain taxes, ensured political stability, strengthening minority investor protections and reduced the level of corruption. The result is the African continent has gained attention in the world. Recently, powerful countries, such as China and Russia have held summits with African leaders in their quests of increasing their businesses in this continent. Other countries, such as France, are due to hold such summits in a year to come. Improvement of African countries’ business conditions is a pathway to economic prosperity and reduction in foreign aid dependence.
The biggest challenge facing African leaders to date is embracing intra-African trade. Some African countries have favored exportation and importation of goods from other continental countries instead of goods from other African countries. The result is the share ofintra-African exports as a percentage of total African exports is about 18%, which is well below the 69% recorded for Europe and 59% for Asia. The rapid economic growth observed in Asian and European countries is attributed by intra-Asian and intra-European trade respectively. I believe that improving intra-African commerce will contribute in advancing the continent’s economic growth.
In speeding up African countries economic growth to attain middle income status by 2030, industrialization is very important. Industrialization has been a campaign promise across the African continent, with its acknowledged ability to bring prosperity, new jobs and better incomes for all. Yet the continent is less industrialized today than it was four decades ago. TheUN Economic Commission for Africa depicts the contribution of Africa’s manufacturing sector to the continent’s gross domestic product declined from 12% in 1980 to 11% in 2013, and it has remained stagnant for over the past few years. This is bad news for African countries which are struggling to liberate their citizens from extreme poverty conditions.
Industrialization in Africa needs good policies such as establishment of a single African currency and creation of special economic zones — such as Shenzhen in China — and positioning the manufacturing sector as a fulcrum to attract investments and create new jobs. Creation of special economic zones will help African countries to advance in their industrialization at the same speed as China. The creation of special economic zones has helped China to liberate more than800 million Chinese from poverty between the years 1980 and 2018. African countries need to copy this policy for speeding up economic development. Some countries like Tanzania have started adopting this policy by creating Kigamboni district as one of its special economic zones. I believe other African countries can also do the same.
It is also important to note that industrialization of African countries will largely depend on the awakening of diasporas. One of the major awakenings were the business summits in different African countries between African Americans and Africans organized by Leon H. Sullivan foundation which closed its doors in 2013. These business summits were important for diasporas to identify areas of investment in Africa and forge business deals with African leaders, businessmen and businesswomen. African diasporas from different countries are influential is bringing advanced technology industries in Africa which will make African manufactured goods acceptable in other continents’ markets.
For years the quality of African manufactured goods has been questioned by buyers from other continents and ended up getting low prices. Eventually, this has contributed to closing of African industries’ operations and make a lot of African countries the major importers than exporters of goods from other continents which affects their economies. I believe the African diaspora investments in manufacturing sector will help to change this perception of the quality of African goods.
Today, Africa calls for committed and determined African leaders and its diasporas to speed up its economic development.