The current externally focused model of African economic development is not working. If there any doubts about this, one only has to look at the huge numbers of African men, women and children risking their lives to cross the Mediterranean to Europe; or at the inadequate response to the Ebola crisis; or at the soaring levels of unemployment among Africa's youth, a situation that is likely to get worse as Africa's population continues to grow.
By continuing to be overly reliant on developed market models of economic development, Africa is behaving like the proverbial poor man who thinks that he can get rich by doing what the rich man does rather than copying what the rich man did to get rich.
The single-digit GDP growth rate of Africa over the last decade has been lauded as a transformation --almost a miracle. But lost in that narrative is the fact that Africa's growth only looks good in relation to its abysmal past performance and against the backdrop of a recession in the developed world and a slowdown in Asian economies. Tellingly, China's slowdown from double-digit growth to 7% is a cited a huge source for concern, whilst Africa's 5% growth is considered excellent.
The fact is that China sustained annual growth of double digits for three decades before it started to catch up with the developed world. This is the challenge for Africa: how does it move from its modest growth of single digits to double digits?
To accelerate Africa's growth to support its rising population and the aspirations of its citizens requires a change in mindset. The continent needs to understand that no country or continent ever developed by relying on foreign aid and funding. Foreign investment and support are important and necessary but they cannot replace domestic savings and financing. The challenge is of how to significantly increase domestic investments in industry, infrastructure and production.
One issue is that financing Africa's transformation requires bigger banks. Small banks and microfinance institutions are useful, but they are incapable of financing the roads, power stations, factories and large commercial operations necessary for economic development. Only big banks and governments can make such investments.
African countries therefore need to encourage the creation of bigger banks, and many states have the capacity to sustain banking sectors with larger domestic banks able to finance accelerated economic development.
However, it is clear that not...