Prospects for Economic Growth in Africa: Lessons for Eritrea

By Semere Solomon

May 25, 2025

Introduction

More than sixty years have passed since decolonization began in Africa, giving rise to numerous independent nations. Yet, the continent continues to be unfairly labeled as the ‘dark continent’—synonymous with underdevelopment, poverty, disease, authoritarian rule, corruption, civil strife, and even genocide. It is often portrayed as a place of unchecked population growth, rampant malaria and HIV/AIDS, and ethnic diversity viewed as a liability rather than a strength. Moreover, Africa grapples with inadequate infrastructure, including inefficient communication and transportation systems, while rapid urbanization—driven by rural poverty—further strains its development.

On the other hand, the continent is rich in vast natural resources, including fertile land, rivers, lakes, minerals, and fossil fuels. It also takes pride in its energetic and hardworking people.[i] It is home to a rich and diverse culture, with traditions dating back thousands of years. The continent cherishes a wealth of social values that are deeply meaningful and worth preserving. Its vast, untouched forests serve as major tourist attractions. Moreover, numerous renowned anthropologists have affirmed that Africa is the cradle of humankind.[ii] Moreover, Africa’s tradition of higher education stretches back to the twelfth century, as exemplified by the historic scholarly hub of Timbuktu in present-day Mali.[iii]  Africa is also home to one of the world’s youngest populations.  

This article examines the foundational drivers of economic growth in Africa, first conceptualizing growth in its broadest terms before evaluating the continent’s current developmental stage through established economic indicators. The analysis then assesses Africa’s economic potential by drawing comparative lessons from regions with analogous socio-economic contexts and historical trajectories. Central to the discussion is the argument that deficient governance represents a critical barrier—one that not only hinders Africa’s development but also contributes to its periodic regression. In closing, the article offers policy-relevant insights on addressing governance challenges as a prerequisite for sustainable development in Africa.

What is economic growth?

In Modern Economic Growth: Findings and Reflections, Simon Kuznetsdefines a country’s economic growth as a long-term rise in the capacity to supply increasingly diverse economic goods to its populations, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands.[iv] In their textbook Economic Development, Michael Todaro and Stephen Smith argue that all three elements of this definition are essential. They elaborate further, stating that economic growth is reflected in a sustained increase in national output, that technological progress is a prerequisite for sustained growth, and that institutional and attitudinal adjustments are necessary to realize technology’s full potential.[v] In the same book, Todaro and Smith identify several key factors associated with growth: physical and human resource endowments; per capita income and GNP levels relative to the global economy; climate; population size, distribution, and growth; the historical role of international migration; gains from international trade; scientific and technological R&D capacity; and the stability and adaptability of political and social institutions.[vi]

Additional factors to consider include geography, access to maritime trade routes, and the form of government. According to classical economics, economic growth is primarily measured by the increase in Gross National Product (GNP)—the market value of all final goods and services consumed by households, the government, and foreign entities within a given year. Furthermore, it posits that growth should be assessed using a standardized economic index, typically expressed as the rate of growth in income per capita, as a key indicator of development.[vii]

The above observations are not universally applicable, and caution must be exercised when applying them. For instance, countries with similar climatic conditions may experience markedly different levels of economic growth. Similarly, nations with limited natural resources often achieve greater prosperity than those with abundant endowments. Additionally, democracies—particularly those transitioning from authoritarian rule—sometimes struggle to foster growth, as competing interest groups can hinder economic progress. That said, it has been well-documented that stable democracies tend to achieve stronger long-term growth compared to authoritarian regimes.[viii]

Africa’s economic growth

In The Bottom Billion, Paul Collier highlights a stark global divide: while 80% of the world’s population lives in rapidly developing countries, the poorest billion remain trapped in stagnant or declining economies. Collier notes that most of these nations are concentrated in Africa and Central Asia, where they struggle with civil conflict, disease, and lack of knowledge. He warns that as these left-behind economies fall further behind—diverging from a globalized world driven by technology, rapid growth, and rising incomes—their reintegration will only grow more difficult.[ix]  

Africa’s persistent underdevelopment is frequently attributed to a complex interplay of factors: colonial legacies, adverse climatic conditions, challenging terrain, and geographical disadvantages—such as limited coastlines relative to landmass. Ethnic fragmentation, often extending to sub-ethnic divisions, alongside political instability fueled by border disputes, civil conflicts, and frequent coups, further compounds these challenges. The impact of foreign aid on Africa’s economic growth remains hotly debated, with critics pointing to an inequitable global economic system that some argue is structurally skewed against the continent.[x] Many African leaders and scholars trace the roots of these issues to historical injustices—the transatlantic slave trade, colonialism, Cold War geopolitics, crippling debt burdens, and the policies of international institutions.[xi] Still others contend that globalization itself has exacerbated Africa’s economic struggles.

It is true that colonialism contributed to the creation of weak states in Africa—a consequence of the fragmented political landscape that emerged after centuries of the slave trade. In essence, the political boundaries and governance structures of most African states today stem from the institutional legacies of European colonial rule in the nineteenth and twentieth centuries.[xii] In Africa’s Stalled Development: International Causes and Cures, David K. Leonard and Scott Straus argue that colonial institutions were primarily designed to serve a small settler community and, as such, were economically oriented toward exports.[xiii] Clearly, this model was inappropriate for the majority of the populations of Africa.

It is also true that the transatlantic slave trade deprived Africa of a significant portion of its workforce for centuries. Many scholars argue that this prolonged phenomenon not only caused profound social instability but also triggered lasting demographic shifts across the continent.[xiv] 

The Cold War significantly hindered Africa’s development. During this period, global superpowers propped up authoritarian regimes across the continent to safeguard their strategic interests—including shipping lanes, military bases, and access to critical minerals and energy supplies.[xv] However, it is important to remember that the Cold War played a significant role in accelerating decolonization..[xvi] The end of the Cold War did not herald a new political era, suggesting that the Cold War itself had little significant impact on Africa’s economic stagnation.[xvii] This implies that the prevalence of Marxist planned economies in Africa during the Cold War might have played a key role in its economic underperformance.    

The impact of foreign aid on Africa’s economic growth—or stagnation—remains hotly debated. Critics argue that aid has fostered a dependency syndrome, thereby contributing to the continent’s sluggish economic development. Scholars like Dambisa Moyo, for instance, reject the idea that aid can alleviate poverty, dismissing it as a misconception. In Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, Moyo asserts that aid has left millions poorer, exacerbating misery and deprivation rather than reducing them. She goes further, condemning aid as an unmitigated disaster—politically, economically, and humanitarianly—for much of the developing world, both historically and in the foreseeable future.[xviii] In 1981, the economist P. T. Bauer summarized the case against aid in three powerful sentences:

The argument that aid is indispensable for development runs into an inescapable dilemma. If the conditions for development other than capital are present, the capital required will either be generated locally or be available commercially from abroad to governments or to businesses. If the required conditions are not present, then aid will be ineffective and wasted.[xix]

It can be argued that despite its limitations, foreign assistance played a crucial role. Certain aspects of social progress—such as rural roads, primary schools, vaccination programs, family planning services, sanitation, and access to clean water—might not have been achievable without it.[xx] Some argue that foreign aid also has an economic rationale, exemplified by the creation of the World Bank in 1946 to foster global trade growth and rebuild the war-ravaged economies of Germany and Japan.[xxi] This, of course, targeted countries that already possessed the institutional capacity to absorb such assistance. Proponents of aid also argue that its benefits were more evident thirty years ago, when economic progress—and by extension, foreign aid—yielded clearer results. For instance, between 1950 and 1975, life expectancy in poor countries rose by fifteen years (from 35 to 50), while adult literacy rates more than doubled, increasing from 30 percent to over 50 percent. Many countries also saw significant improvements in access to healthcare, education, and clean water during this period.[xxii] 

In The Trouble with Africa: Why Foreign Aid Isn’t Working, Calderisi acknowledges that historical and structural factors—such as slavery, colonialism, the Cold War, international institutions, high debt, geography, Africa’s numerous small states, and population pressures—have all shaped the continent’s development. Yet he argues that none of these fully explain why Africa has regressed economically over the past three decades, especially given its post-independence growth. Calderisi notes that after a prolonged period of contraction, African economies are now recovering—but only at a sluggish pace.[xxiii] Such arguments suggest that the fundamental causes of Africa’s economic stagnation must be sought elsewhere.  

Prospects for Africa’s Economic Growth

Combating poverty demands sustained economic growth supported by sound policies and substantial investments in education and health. Without growth, large populations remain trapped in poverty.[xxiv] True development occurs when growth translates into tangible improvements in people’s lives through equitable wealth distribution. Ultimately, meaningful progress requires narrowing the gap between the wealthy few and the impoverished majority to enhance overall quality of life.    

Africa need not reinvent the wheel to achieve economic growth. While the continent possesses unique characteristics—including its history, culture, geography, natural resources, human capital, and climate—it can adapt proven growth strategies from countries with similar socioeconomic conditions.

As Todaro and Smith emphasize in Economic Development, sustainable progress requires more than just efficient resource allocation (typically market-driven) and steady output growth. Nations must also establish the economic, social, and institutional frameworks necessary to deliver rapid, large-scale improvements in living standards. Crucially, this involves addressing fundamental questions about power and equity: Who controls economic decision-making, and whose interests do these decisions serve?

The authors further stress that international factors must be integral to any growth strategy.[xxv] These include: the behavior of the international market, interest rates, global economic health, etc. 

Another important factor to consider when examining Africa’s economic growth is that the continent is far from homogeneous. Comprising more than fifty countries, each has its own distinct history, relationships with the West, intra-African dynamics, natural resource endowments, and governance structures. A striking comparison can be drawn between two landlocked, diamond-rich nations: Botswana and the Central African Republic. Botswana has successfully transformed into a middle-income economy through sound governance, while the Central African Republic’s economic progress has stagnated—primarily due to poor governance.[xxvi]

In Africa, common strategies for economic growth typically include: market-driven capital accumulation by local entrepreneurs, targeted investment policies (both domestic and foreign) in high-potential sectors (primary, secondary, or tertiary), sound macroeconomic management (fiscal and monetary policy), human capital development (education and health), and stronger regional cooperation. People remain central to growth. African nations must empower the poor by expanding access to education, skills training, employment, entrepreneurship, and investment opportunities. As Paul Collier argues in his TED lecture, fostering a critical mass of informed citizens is also essential for sustainable development.[xxvii] 

To enhance economic growth, Africa must establish a robust regulatory framework aligned with international standards, implement effective poverty reduction strategies, and foster an inclusive financial sector that serves marginalized populations. Strong institutions, the rule of law, fiscal discipline, and transparent governance—including checks and balances, anti-corruption measures, and efficient resource allocation—are critical for stability and sustained growth. Beyond institutional reforms, social foundations such as family structures, cultural values, and education also contribute to political stability, creating an environment where economies can thrive.[xxviii]

Infrastructure lays the foundation for economic growth, while a skilled workforce serves as its backbone. Women are pivotal drivers of development, empowering households and lifting families out of poverty through their economic contributions. In agrarian Africa, agriculture remains the dominant sector—fueling employment, ensuring food security, and holding untapped potential through technological innovation. However, progress must not come at an environmental cost; sustainable practices are essential to safeguarding Africa’s long-term economic stability.   

Consequently, effective policies, legislation, and regulatory frameworks must be implemented to ensure sustainable management of environmental resources and prevent ecological crises.[xxix] Responsible ecosystem management should be integrated into the ethical and religious values that underpin development. Renowned African economist and former Nigerian Finance Minister Ngozi Okonjo-Iweala emphasized this in her lecture, ‘Want to Help Africa? Do Business Here!’ She highlighted how privatization, market liberalization, improved financial management, economic diversification, market predictability, and banking system consolidation contributed to Nigeria’s stronger economic performance in the early 2000s.[xxx] 

But key to all the above is good governance. Otherwise, everything can be stalled.

Good governance: the way out to Africa’s economic growth

Good governance is essential for Africa’s economic growth, serving as a safeguard against market collapses and policy failures. As defined by Webster’s Dictionary, governance refers to ‘the manner in which power is exercised in managing a country’s economic and social resources for development.’[xxxi]  The World Bank defines governance as the traditions and institutions through which authority in a country is exercised. This encompasses: the processes for selecting, monitoring, and replacing governments; the government’s ability to formulate and implement sound policies; and the mutual respect between citizens and the state for the institutions governing economic and social interactions. The World Bank (WB) measures governance across six key dimensions: voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption.[xxxii]

In Introduction to Sustainable Development, Peter Rogers and his co-authors highlight that poor governance impedes development, distorts its processes, and disproportionately harms the poor. They contend that good governance depends on accountability, participation, decentralization, predictability, and transparency.[xxxiii] Accountability ensures that officials answer for their actions. Decentralization improves participation by engaging all stakeholders in decision-making, while predictability depends on consistently enforcing sound policies, laws, and regulations. Finally, transparency requires that citizens are fully informed about government actions and policies.[xxxiv]

Several African countries are famous for their notorious governance structures, mostly characterized by one-man rule, nepotism, corruption, lack of transparency and accountability, financial mismanagement, abuse of human rights, and lack of an effective method to combat corruption. Polity IV data summarizes the situation in Africa in 2006 as follows: 

Africa is still home to at least eleven fully autocratic regimes (Congo Brazaville, Equatorial Guinea, Eritrea, Gabon, The Gambia, Mauritania, Rwanda, Sudan, Swaziland, Uganda, and Zimbabwe). Three African heads of state (dos Santos of Angola, Obiang of Equatorial Guinea, and Bongo of Gabon) have been in power since the 1970s (having ascended to power on 2 December 1967, President Bongo has recently celebrated his fortieth year in power). Five other presidents have had a lock on power since the 1980s (Compaore of Burkina Faso, Biya of Cameroon, Conte of Guinea, Museveni of Uganda, and Mugabe in Zimbabwe). Since 1996, eleven countries have been embroiled in civil wars (Angola, Burundi, Chad, Democratic Republic of Congo, Republic of Congo, Guinea-Bissau, Liberia, Rwanda, Sierra Leone, Sudan, and Uganda.[xxxv]

This aligns with Paul Collier’s characterization of African leaders in The Bottom Billion—individuals who attained power through extralegal means.[xxxvi] 

According to Calderisi, economic growth is achievable, and foreign assistance proves most effective in countries where governments are already committed to sound governance—setting clear priorities, implementing coherent policies, and strengthening key institutions based on domestic needs rather than external expectations.[xxxvii] Collier and Gunning in in an article titled Explaining African Economic Performance highlight an inverse relationship between economic growth and overseas development aid (ODA) in most African countries, attributing this trend to weak policy environments.[xxxviii]

Paul Collier further expands on this theme in his seminal State Department lecture, New Rules for Rebuilding a Broken Nation, emphasizing the critical role of clean government in fostering youth employment and equitable social services. Such reforms, he argues, can catalyze a shift from exploitative ‘politics of plunder’ to transformative ‘politics of hope.’[xxxix]  

The evidence suggests that without meaningful governance reforms, Africa’s economic growth will remain stunted. African governments must move beyond protecting narrow interests and adopt inclusive, homegrown strategies tailored to their unique challenges—rather than conforming to external political or economic agendas.

To achieve this, they must first address systemic inefficiencies by building robust, transparent institutions and implementing clear standards for policy execution. Corruption must be eradicated through stringent checks and balances, while meritocratic systems should cultivate a new generation of skilled professionals to drive transformative change. Equally critical is fostering inclusive governance. Civil society organizations, NGOs, and other stakeholders must actively participate in both development discourse and decision-making processes to ensure equitable progress.

African nations must strengthen regional cooperation by establishing mechanisms that hold governments mutually accountable to their citizens. Tolerance for lawlessness must end, with peer pressure ensuring adherence to governance standards that prioritize public welfare.

For the West, supporting Africa’s economic growth is not merely altruistic—it’s a strategic imperative. Such cooperation fosters global stability, strengthens economic ties, and advances shared prosperity. However, this requires fundamentally rethinking and engagement. The OECD economies must transition from a donor-recipient dynamic to genuine partnership, recognizing Africa as an equal stakeholder. True collaboration demands jointly defined objectives and implementation strategies, relationships grounded in shared values and long-term vision, mutual respect for each party’s contributions and capabilities, and institutionalized trust and solidarity in both principle and practice.

This empowerment framework moves beyond transactional aid, creating sustainable pathways for collective progress.

Endnotes

[i] Africa Environment Outlook: Past, present and future perspectives, GRID-Arendal and UNEP,

http://www.grida.no/publications/other/aeo/

[ii] http://www.bbc.co.uk/worldservice/specials/1624_story_of_africa/page92.shtml  

[iii] Shamil Jeppie and Souleymane Bachir Diagne (eds). The Meanings of Timbuktu, CODESRIA/HSRC, 2008, 416 p., http://www.codesria.org/spip.php?article643&lang=en

[iv] Simon Kuznets, Modern Economic Growth: Findings and Reflections, American Economic Review 63, 1973, 247-258.

[v] Michael P. Todaro and Stephen C. Smith, Economic Development-8^th ed. (Boston: Addison Wesley, 2003), 85.

[vi] Ibid. 91-99

[vii] Michael P. Todaro and Stephen C. Smith, Economic Development-8^th ed. (Boston: Addison Wesley, 2003), 15

[viii] Ibid. 98

[ix] Paul Collier, The Bottom Billion (New York: Oxford University Press, 2007), 3-4.

[x] Robert Calderisi, The Trouble with Africa, Why Foreign Aid is not Working (New York: Palgrave Macmillan, 2006), 14.

[xi] Ibid. 7

[xii] David K. Leonard and Scott Straus, Africa’s Stalled Development: International Causes and Cures (Colorado: Lynne Reinner Publishers, 2003), 8.

[xiii] Ibid. 10

[xiv] Ibid. 8

[xv] Robert Calderisi, The Trouble with Africa, Why Foreign Aid is not Working, (New York: Palgrave Macmillan, 2006), 26.

[xvi] Ibid. 27

[xvii] Ibid. 27

[xviii] Dambisa Moyo, Dead Aid: Why Aid is not Working and How There is a Better Way for Africa, (New York: Farrar, Straus and Girous, 2007), xix.

[xix] P. T. Bauer, Equality, the Third World, and Economic Delusion, (Cambridge: Harvard University Press,  1981), 100.

[xx] Robert Calderisi, The Trouble with Africa, Why Foreign Aid is not Working (New York: Palgrave Macmillan, 2006), 160.

[xxi] Ibid. 156

[xxii] World Bank, World Development Report, pp. 33-35

[xxiii] Robert Calderisi, The Trouble with Africa, Why Foreign Aid is not Working (New York: Palgrave Macmillan, 2006), 14.

[xxiv] http://www.yara.com/sustainability/global_trends/growth/index.aspx   

[xxv] Michael P. Todaro and Stephen C. Smith, Economic Development-8^th ed. (Boston: Addison Wesley,  2003), 23.

[xxvi] Paul Collier, The Bottom Billion (New York: Oxford University Press, 2007), 53-58.

[xxvii] Paul Collier, On the Bottom Billion, TEDGlobal, May 2008 http://www.ted.com/speakers/paul_collier.html  

[xxviii] CIDA, Stimulating Sustainable Economic Growth, http://acdi-cida.gc.ca/INET/IMAGES.NSF/vLUImages/EconomicGrowth/$file/Sustainable-Economic-Growth-e.pdf  

[xxix] Ibid.

[xxx] Ngozi Okonjo-Iweale, Want to Help Africa, Do Business Here, TEDGlobal, 2008 http://www.ted.com/talks/ngozi_okonjo_iweala_on_doing_business_in_africa.html

[xxxi] Webster’s II New Riverside University Dictionary, (Boston: The Riverside Publishing Company, 1984)

[xxxii] http://info.worldbank.org/governance/wgi/index.asp  

[xxxiii] Peter P Rogers, Kazi F Jalal, and John A Boyd, An Introduction to Sustainable Development (London:  Earthscan, 2009), 62.

[xxxiv] Ibid. 63

[xxxv] Polity IV Project, Political Regime Characteristics and Transition, 1800-2006, at http://www.systemicpeace.org/polity/polity4.htm

[xxxvi] Paul Collier, The Bottom Billion, (New York: Oxford University Press, 2007), 4.

[xxxvii] Robert Calderisi, The Trouble with Africa, Why Foreign Aid is not Working (New York: Palgrave Macmillan, 2006), 160.

[xxxviii] Paul Collier and Jan Willem Gunning, “Explaining African Economic Performance.”Journal of Economic Literature 37, no. 1 (1999): 64-111.

[xxxix] Paul Collier, New Rules for Rebuilding a Broken Nation, TEDGlobal, 2009, http://www.ted.com/talks/paul_collier_s_new_rules_for_rebuilding_a_broken_nation.html

Works Cited – Bibliography

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Calderisi, Robert. The Trouble with Africa: Why Foreign Aid is not Working. New York: Palgrave Macmillan, 2006.

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Collier, Paul. The Bottom Billion, New York: Oxford University Press, 2007.

Collier, Paul and Jan Willem Gunning. “Explaining African Economic Performance”. Journal of Economic Literature 37, no. 1. 1999. 64-111

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Collier, Paul. “New Rules for Rebuilding a Broken Nation,” TEDGlobal, 2009 at http://www.ted.com/talks/paul_collier_s_new_rules_for_rebuilding_a_broken_nation.html

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Jeppie, Shamil and Souleymane Bachir Diagne (eds). The Meanings of Timbuktu, CODESRIA/HSRC, 2008, 416 p., http://www.codesria.org/spip.php?article643&lang=en   

Kuznets, Simon.  Modern Economic Growth: Findings and Reflections. American Economic Review 63, 1973. 

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Webster’s II New Riverside University Dictionary. Boston: The Riverside Publishing Company, 1984.

World Bank, World Development Report, pp. 33-35)

World Bank, http://info.worldbank.org/governance/wgi/index.asp   

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