Africa has long captured the imagination of the world with thinkers, political and business leaders preoccupied with a single question; how to help Africa’s economy grow so it can trade with the world on equal terms.
The answer is simple: Africa needs to craft its own solutions to solve its problems. It starts with the promotion of a mindset of self-reliance. There’s no better way of expressing that self-sufficiency than creating innovative financing solutions to fund projects that could lead to sustainable economic growth in the continent’s 54 countries.
However, these funding solutions need to consider the specific needs of different African countries. If this could be realised, the continent would improve economically.
The need for alternative funding solutions has never been greater given the uncertain economic prospects the continent faces. While Africa’s prosperity rose dramatically in the past few years due to greater integration into the world economy, this picture has since changed.
Economic growth in sub-Saharan Africa slowed to 3.7 per cent in 2022, from 4.1 per cent in 2021; and economic activity in the region is projected to further decline to 3.1 per cent in 2023. Africa faces grain shortage because of the Russian-Ukraine conflict. This calamity comes at a time when the continent’s economy was still recovering from the effects of the coronavirus.
Development finance has its limitations in amounts available, acceptable repayment risk and in some cases; financing cost vs project viability. Similarly, such finance often comes with strictures on how African nations should run their economies. As such, solutions that are imported rather than developed at home may inadvertently come at a hefty price.
This is a legacy of the post-World War II era, when extraordinary efforts to provide provisional financial and technical assistance to European countries in the wake of the war’s devastation helped to set them back on the path to national unity. Since then, this approach’s foundations have become the cornerstone of development thought.
But there’s no denying that the traditional development finance model has not worked for Africa over the past six decades. Even though the world economy has grown in the past few decades, most African nations lag economically and grapple with abject poverty. Their commodities are highly susceptible to market fluctuations and natural disasters, and their societies are prone to instability, making it difficult to attract foreign investment.
That is why most African nations turn to development aid to survive, which is not a viable model to realise sustainable development. Since 1990, African countries have received over $1.6 trillion in development assistance; however, the continent’s financial, societal and political fabric remains fragile.
Even developed economies that we envy today made economic strides on their own, with little or no outside help. Back in 1978, Deng Xiaoping, leader of China, famously said: “It doesn’t matter whether a cat is black or white, as long as it catches mice.” Today, China is the second-largest economy that continually seeks to be self-sufficient in key areas such as technology, finance, food and energy.
Singapore is another economic marvel. In 1965, the country achieved independence with a GDP of $975 million. Its current GDP is close to $400 billion. Even more remarkable is the fact that this growth was accomplished with only 3 million people. This makes its GDP per capita the second-highest in the world.
Development of any society depends on its production of goods, services and the ideas for creating them. The belief that the country can be transformed merely by imitating the melodies of the first world cannot be real or sustainable. Indeed, it’s time for Africans to heed this call for African solutions to African problems.
National organising secretary, Ford Kenya
