Every year, Africans are told their economies are growing. Governments announce industrial parks, roads, digital hubs and investment deals. National plans promise manufacturing, value-addition, exports, jobs and prosperity.
Yet many families experience a different economy. Young people struggle to find work that uses their education. Small businesses remain small, not for lack of ambition, but because they lack affordable finance, technology and access to markets. Farmers produce but capture little value while salaries fail to keep pace with the cost of food, transport, housing, education and other basics.
If our economies are growing, why do many people feel they are standing still? Part of the answer lies in a distinction central to development economics: growth and transformation are related, but they are not the same. Growth tells us if an economy is producing more.
Transformation asks whether its productive structure and capacities are changing in ways that create higher-value activities, better work and rising household incomes.
This distinction is urgent. The World Bank projects that Sub-Sahara’s economy will grow by 4.1 per cent this year. However, today’s growth must be judged against the scale of tomorrow’s challenge.
With more than 620 million people expected to enter Africa’s labour force by 2050, headline growth will mean little unless our economies can create productive enterprises, better work and rising household incomes at scale.
Transformation, therefore, requires productive capacities. UNCTAD defines these as the productive resources, entrepreneurial capabilities and linkages that together determine a country’s ability to produce goods and services. Firms develop the capabilities to produce and compete, while governments help build and coordinate the wider system through skills, infrastructure, effective institutions, policy certainty and access to finance, technology and markets.
Consider two farmers working equally hard. One depends on unpredictable rainfall and sells an unprocessed crop to an intermediary. The other has access to irrigation, reliable inputs, agricultural knowledge, storage, processing facilities and a stable market.
The same applies to enterprises. A furniture maker facing unreliable electricity, unpredictable policies, expensive inputs and outdated equipment cannot compete with one supported by affordable finance, modern kits, skilled workers and efficient logistics. The difference is not effort or ambition, but the productive system within which each operates.
As productive capacities strengthen, workers and firms can create more value from the resources available. Productivity can rise, providing the economic basis for better wages, more competitive enterprises and higher revenues.
The objective of transformation must, therefore, be to create pathways into progressively more productive, secure and better-remunerated work. This requires successful farms, competitive factories and sophisticated service industries. It also requires enterprises that can grow from micro-businesses into stable small and medium-sized firms and eventually major companies.
This depends on continually deepening the technological, managerial and organisational capabilities of workers and firms. Over time, they must learn to produce more complex goods and services, meet global standards, adapt technology and manage supply chains.
This does not mean attempting to produce everything. It means identifying areas of advantage, entering viable value chains and moving into higher-value activities like specialised inputs, processing, design, branding and distribution. That is how economies capture more value.
Foreign investment can support that process, but its contribution should not be measured only by the amount of capital announced. We must also ask if it develops domestic suppliers, transfers knowledge, builds skills, expands export capacity and strengthens enterprises.
An investment that operates as an island may generate economic activity without building the productive capacities required for lasting transformation.
Building this productive strength also requires more than isolated projects. Too often, African development plans become catalogues of industrial parks, special economic zones, innovation hubs and development funds, each announced as if transformation will follow automatically. Such projects can help build productive capacities, but they are instruments, not outcomes.
An industrial park contributes to transformation only when it connects firms to reliable power, capable suppliers, skilled workers, technology, finance and markets.
The real test of government action is not simply what has been built or how much is spent. It is which productive constraint has been solved and what new capacity workers, firms or the wider economy have acquired. This is the discipline that separates economic strategy from political announcements.
Citizens do not need to be economists to tell if a development plan is credible. It should make clear what the country intends to become better at producing, which sectors can generate better jobs and incomes, what constrains their growth and what the government will do differently. The choices must then be translated into clear priorities, targets, responsibilities and timelines.
GDP remains important, but it cannot be the only measure of progress. We must also ask if enterprises are growing, workers are creating greater value, young people are moving into better work, domestic suppliers are capturing more value and family incomes are keeping pace with costs. These are the signs of an economy building productive strength.
Africa’s next development conversation must move beyond headline growth rates and catalogues of projects. The real question is not only whether an economy is growing, but what it is becoming capable of producing and if that transformation is creating better work, higher incomes and better lives.