It was a tantalising year for Africa, 2007. Fuelled by a roaring global economy and supported by sound macroeconomic policies and better governance, the region's economies grew at more than 7%, the threshold for taking off, doubling every 10 years.
Inflation was down from 22% a decade before to 8%, budget deficits from 4.6% of GDP to 1.8%, and government debt from 82% of GDP to 59%. Foreign direct investment was set to climb the next year to $62bn, from $9bn at the start of the decade. Africa clearly is on the move.
After slowing down in the great recession, growth rebounded to 5% in 2010 and, according to the IMF, is set to rise to 5.5-57% through 2014. But that is simply not fast enough, and we have to look farther ahead, to 2030 and beyond for ways to sustain rapid growth.
Justin Lin, the World Bank's Chief Economist, says that Africa can grow at 7% for 20-30 years, boosting many countries to middle income status. (See page 13.) Far-fetched? Not at all. Just look at Ethiopia growing at 11 % today.
But the current policies - as usual picking the low-hanging fruit for short-term growth-won't get us there. What's needed is nothing short of an economic transformation - building skills and technological capabilities, attracting domestic and foreign investment in competitive industries, vastly diversifying exports, and moving into modern and higher value agriculture.
Where Africa is today
There has been little success in changing the structures of African economies over the past 30 years. In almost all of them, production is dominated by the primary sector in either agriculture or minerals.
Except for South Africa and Mauritius, no country has viable manufacturing that is internationally competitive in any product. The same is true for services, except for tourism in a small number of countries, such as Botswana, Kenya, Mauritius, Seychelles, and South Africa.
Agriculture is marked by low productivity with little application of science and technology. In mining, almost all the operations using modern technology are foreign-owned enclaves with few linkages with the rest of the economies.
Foreign trade mirrors the production structure: exports are dominated by primary commodities incorporating little application of science and technology, while the bulk of manufactures and knowledge-based services are imported.
Unsurprisingly, the failures to create new production and export opportunities have led to high...