Can Africa pull off its own economic miracle?

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In just three decades, 23 economies in East Asia, led by eight high-performing Asian economies (HPAEs), managed to achieve what some economists and historians alike see as the blueprint of development economics.

Between 1965 and 1990, the ‘Four Tigers’ – Hong Kong, the Republic of Korea, Singapore and Taiwan – together with Indonesia, Malaysia, Thailand and Japan, pulled off what at the time was unusual for developing economies: rapid and sustained economic growth alongside relatively equal income distribution.

This has firmly cemented their ‘East Asian Economic Miracle’ title on history’s hall of fame.

These eight economies saw elevated rates of growth in manufactured exports, with their share of global exports of manufactured goods jumping from 9% in 1965 to 21% in 1990.

Physical capital also edged higher in the period, supported by higher rates of domestic savings.

The growth story of the HPAEs is also attributed to the accumulation of physical and human capital that was allocated to highly productive investments such as infrastructure.

Most notably was the foresight to acquire and master technology, think Samsung, LG, Toyota and Nissan to name a few.

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Proponents of this development model are interested in replicating it in the African context.

In this episode of The Business of Africa, we speak to Mickael Vogel, associate vice president in the research team at the African Finance Corporation (AFC), about what a coherent deployment of capital can achieve.

State of play

Official development assistance (ODA) has played a notable role in development in sub-Saharan Africa (SSA), comprising 3% of regional GDP in 2024, more than twice the share of the Middle East and Central Asia region.

The assistance has mainly been provided by bilateral donors and multilateral institutions in the form of grants or concessional loans. In 2024, grants contracted to 68% from 97% in 2010, while concessional loans accelerated to 32% from 3% in the same period.

Low-income countries, including Malawi, the Central African Republic and Mozambique, as well as fragile and conflict-affected states such as South Sudan, Ethiopia and Cameroon, have been the major recipients of aid compared to emerging market economies.

According to the International Monetary Fund, more than half of aid has been directed towards health, education and humanitarian assistance, with most of the remainder allocated to infrastructure and other investments.

Over the years, the flow of trade has witnessed a downward trend as donor priorities shift domestically and multilateral development partners contend with funding cuts of their own.

This has amplified calls for the continent to turn inward and mobilise domestic capital resources to drive its development.

Africa’s domestic capital pools 

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If the 2026 State of Africa Infrastructure Report by the AFC is anything to go by, Africa is more than capable of financing its own development goals.

The AFC has found that the continent now holds over $4 trillion in domestic financial resources within pension and insurance assets, central bank reserves, public development banks and sovereign wealth funds.

However, investments in infrastructure and productive sectors remain stubbornly low, as asset allocation patterns remain a binding constraint.

Image: African Finance Corporation

Financial systems across much of the continent continue to favour short-duration, low-risk assets, heavily skewed to government securities – namely short-term treasury bills – together with notable holdings in money market instruments like deposits and cash.

This has resulted in long-term savings circulating within financial markets and failing to translate into productive investments. It demonstrates that the continent does not have a capital mobilisation problem, but one of allocation.

For Africa to realise an economic miracle of any sort and meet its development goals, it will need strong and effective leadership, meaningful human capital accumulation, high savings rates and intermediation.

For previous episodes of The Business of Africa podcast, click here. 

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