Driving Economic Transformation in African Transition States: Experts Call for Governance Reforms, Enhanced Resource Mobilization, and Stronger Partnerships

September 18, 2025

Abuja, Nigeria – Leading economists and Development Leaders have issued a compelling call for transformative Governance Reforms, bolstered Domestic resource mobilization, and innovative Partnerships to catalyze Economic Transformation across Africa’s most vulnerable nations.The urgent plea emerged during a high-Level Policy Dialog convened by the African Development Institute (ADI) in conjunction with the 66th Annual Conference of the Nigerian Economic Society (NES).

The Challenge of Transition States

Africa’s Transition States – nations grappling with political, Economic, Security, and Environmental instabilities – represent the continent’s most precarious economies. these countries are striving for increased Stability and Resilience in increasingly complex global conditions. Currently, 24 African countries are classified as transition states, a rise from 22 in the last four years, with over 250 million citizens directly impacted by fragility and more than 44 million forcibly displaced by mid-2024.

A Massive Funding Gap

Abdul Kamara,the African Development Bank Director General for the nigeria Country Department,underscored the scale of the challenge. He stated that Africa requires an estimated $811 billion annually to achieve Inclusive Growth and Lasting Development, but currently faces a shortfall of approximately $680 billion per year. Transition states alone require $210 billion yearly, with a financing gap of $188 billion.

Prioritizing Inclusive Growth

kamara emphasized that the Bank’s approach centers on Inclusive Growth,actively promoting Job Creation,empowering Youth and Women,and dismantling Structural Bottlenecks. The Bank is currently investing in crucial sectors like Youth development, Women’s empowerment, Infrastructure, Energy, Education, and Technology, exemplified by Nigeria’s $618 million iDICE program, designed to foster Innovation and propel the Creative Economy.

Capacity Building and knowledge Management: key to Success

Eric Ogunleye, Director of the ADI, highlighted the increasing urgency of addressing Fragility. He stressed that Capacity Development and Knowledge Management are not merely supplementary, but central to sustained Transformation. “Capacity is crucial to policymaking and institution-building,” Ogunleye explained, “We must move away from copy-and-paste policies and develop locally relevant and tailored strategies.”

Did You Know? According to the World Bank, investments in education and healthcare are critical components of capacity building, contributing directly to human capital development and long-term economic growth.

Governance and Conflict Resolution: Foundational Reforms

experts consistently reinforced the primacy of Governance reforms and Conflict Resolution. Emmanuel Owusu-Sekyere, Director of Research at the African Center for Economic Transformation (ACET), asserted that resolving conflict must precede any meaningful development initiatives. “efforts must first focus on ending the conflict before any developmental activity can start,” he stated. “Establishing Good governance and Visionary Leadership are paramount.”

Addressing Illicit Financial Flows and Debt

Adeyemi Dipeolu,a Policy Advisor,highlighted Africa’s relatively low Tax-to-GDP ratio (17%) compared to Latin America (29%) and East Asia (26%). He stressed the need to combat Illicit Financial Flows, estimated to cost Africa $90 billion annually, and effectively leverage Remittances, which reached $56 billion in 2024. He cautioned that seven of nine countries currently in debt distress globally are located in Africa.

Financing the Future: climate Finance and Partnerships

Jane Mariara, Executive Director of the Partnership for Economic Policy (PEP), acknowledged the decline in customary Development Assistance but underscored the opportunities presented by increasing Climate finance flows to Africa, which surged to $137 billion in 2024.she advocated for stronger Debt Management Capacity and expanded utilization of Blended Finance and Risk-Sharing mechanisms.

Key Financial Indicators for African Transition States (2024)

Indicator	Amount (USD Billions)
Total financing Required	210
financing Shortfall	188
Illicit Financial Flows (Annual Loss)	90
Remittances Received	56
Climate Finance Flows	137

Pro Tip: Diversifying revenue streams, including promoting eco-tourism and value-added agriculture, can enhance economic resilience and reduce reliance on volatile commodity markets.

Seedwell Hove, Division Manager at the African Development Institute, concluded that Capacity Development is foundational for Economic growth and Transformation, while Knowledge Management is vital for scaling impact. He reiterated that these elements are critical for Africa’s journey from fragility to resilience and transition to transformation.

Looking Ahead: Long-Term Strategies for Success

The dialogue underscores a crucial truth: sustainable development in Africa’s transition states isn’t solely about financial injections. A holistic approach emphasizing strong governance, tailored policies, and strategic partnerships is indispensable.The focus must shift toward empowering local communities, fostering innovation, and building robust institutions.The future of africa’s economic transformation hinges on its ability to harness its own potential and adapt to the challenges of a rapidly changing world.

What role can international organizations play in supporting these reforms without undermining local ownership? and how can African nations effectively leverage technology to enhance governance and clarity?

Frequently Asked Questions

• What is a transition state in the African context? A transition state refers to an African country facing significant political, economic, and security challenges, striving for greater stability and resilience.
• What is the primary financial challenge facing African transition states? The main challenge is a substantial funding gap, with a current shortfall of $188 billion annually.
• why is capacity development crucial for Africa’s economic transformation? Capacity development is vital for effective policymaking, institution-building, and the creation of locally-relevant strategies.
• What role does governance play in achieving economic stability? Strong governance and conflict resolution are foundational prerequisites for attracting investment and fostering sustainable development.
• How can illicit financial flows be addressed? Tackling illicit financial flows requires strengthening financial regulations, promoting transparency, and international cooperation.

Share your thoughts on Africa’s economic future in the comments below!

How can governance reforms specifically address corruption and promote accountability in African transition states?

Driving Economic Change in African Transition states: Experts Call for Governance Reforms, Enhanced Resource Mobilization, and Stronger Partnerships

The imperative for Economic Diversification in Africa

African transition states – nations navigating political and economic shifts – face unique challenges to achieving lasting economic growth. Over-reliance on commodity exports, coupled with fragile governance structures and limited access to capital, hinders progress. Experts increasingly emphasize that economic transformation in Africa requires a multi-pronged approach focusing on governance reforms,resource mobilization,and international partnerships. This isn’t simply about GDP growth; it’s about inclusive growth that benefits all segments of society and builds resilience against future shocks.Key areas for focus include diversifying african economies, fostering private sector development, and investing in human capital.

Governance Reforms: Laying the Foundation for Sustainable Growth

Good governance is arguably the most critical ingredient for unlocking economic potential. Weak institutions, corruption, and political instability create an unfavorable surroundings for investment and entrepreneurship.

* Strengthening Rule of Law: Establishing autonomous judiciaries and enforcing contracts are vital for attracting both domestic and foreign investment. This builds investor confidence and reduces perceived risk.

* Combating corruption: Implementing obvious procurement processes, strengthening anti-corruption agencies, and promoting accountability are essential. Corruption diverts resources away from productive investments and undermines public trust.

* Improving Regulatory Frameworks: Streamlining business registration processes, reducing bureaucratic hurdles, and creating a predictable regulatory environment are crucial for fostering private sector growth.

* Promoting Political Stability: Inclusive political processes, respect for human rights, and peaceful transitions of power are fundamental for creating a stable environment conducive to long-term economic development. Political risk insurance is becoming increasingly important for investors.

Enhanced Resource Mobilization: Beyond Traditional Aid

Traditional development aid, while important, is insufficient to meet the massive investment needs of African transition states. Domestic resource mobilization is therefore paramount.

* Tax Reform: Improving tax collection efficiency, broadening the tax base, and addressing tax evasion are critical. This includes investing in tax administration capacity and tackling illicit financial flows.

* Public-Private Partnerships (PPPs): Leveraging private sector capital and expertise through PPPs can help finance infrastructure projects and deliver essential services. Successful PPPs require clear legal frameworks and transparent procurement processes.

* Debt Management: Prudent debt management is essential to avoid unsustainable debt burdens. This includes diversifying funding sources, negotiating favorable loan terms, and prioritizing investments with high economic returns. The recent debt restructuring efforts in Zambia offer valuable lessons.

* Harnessing Natural resources: Managing natural resources transparently and sustainably is crucial.This includes ensuring fair revenue sharing agreements, investing in value addition, and protecting the environment. The African Continental Free Trade Area (AfCFTA) presents opportunities to process raw materials locally.

The Power of Partnerships: Fostering Collaboration for Impact

Effective partnerships are essential for accelerating economic transformation.This includes collaboration between governments, the private sector, civil society, and international organizations.

* South-South Cooperation: Learning from the experiences of other developing countries, notably those that have successfully navigated similar transitions, can provide valuable insights. China’s infrastructure investments in Africa, while debated, demonstrate the potential of South-South cooperation.

* Foreign Direct Investment (FDI): Attracting FDI can bring capital, technology, and expertise. Creating a favorable investment climate, as discussed above, is crucial for attracting FDI. Focusing on impact investing can ensure that FDI aligns with sustainable development goals.

* Regional Integration: The AfCFTA has the potential to significantly boost intra-African trade and investment. Implementing the AfCFTA effectively requires addressing non-tariff barriers and harmonizing trade regulations.

* International Financial Institutions (IFIs): The World bank and the IMF can provide financial assistance, technical expertise, and policy advice. However,it’s important to ensure that IFI lending is aligned with national development priorities and does not exacerbate debt vulnerabilities.

Investing in Human Capital: The Foundation of Long-Term Growth

Economic transformation is ultimately driven by people. Investing in education, healthcare, and skills development is thus essential.

* Education: Improving access to quality education at all levels is crucial for building a skilled workforce. This includes investing in teacher training, curriculum development, and infrastructure. Focusing on STEM education (Science, Technology, Engineering, and Mathematics) is particularly important.

* healthcare: Strengthening healthcare systems is essential for improving health outcomes and increasing productivity. This includes investing in primary healthcare, disease prevention, and access to essential medicines.

* Skills Development: providing vocational training and skills development programs that are aligned with the needs of the labor market is crucial for creating employment opportunities. Digital literacy is becoming increasingly critically important in the modern economy.

* Youth Empowerment: Investing in youth entrepreneurship and creating opportunities for young people to participate in the economy is essential for harnessing the demographic dividend.

Case Study: Rwanda’s Economic Transformation

Rwanda’s post-genocide recovery is a compelling example of how strong governance, strategic investments, and international partnerships can drive economic transformation. the government prioritized good governance, invested heavily in education and healthcare, and created a favorable business