From Aid to Industry: How Africa’s Informal Sector and Youth Could Drive Inclusive Growth
For decades, many African nations have relied heavily on foreign aid to fund healthcare, education, and emergency relief. But in 2025, this model is crumbling. Major donors like the United States, the UK, and Germany are cutting back sharply on their development spending. The reality is setting in: donor aid is no longer a sustainable pillar of Africa’s development. While it once served as a lifeline, aid rarely sparked long-term job creation or industrial expansion. Now, as this support dries up, the continent must pivot urgently toward self-sustained growth, and that means embracing industrialisation.
The informal sector often overlooked in macroeconomic strategies—is poised to become central to this transformation. From Nigeria to Ghana, street traders, small-scale artisans, and micro-entrepreneurs have long formed the backbone of local economies. Unlike donor-funded initiatives, these activities are rooted in local demand and ingenuity. As examples from Vietnam and Ethiopia show, real development comes from building productive capacity: exporting manufactured goods, investing in transport and energy, and training people in technical skills—not from handouts.
But challenges abound. Aid withdrawal is already causing harm in fragile countries like Malawi and South Sudan, where major health and education projects are being frozen. Simultaneously, illicit financial flows continue to drain over $90 billion annually from the continent—more than what Africa receives in aid. If Africa is to develop sustainably, we must confront this drain head-on through legal reform, transparent institutions, and regional coordination. Every dollar lost to corruption is a missed opportunity to build infrastructure, create jobs, and educate youth.
Despite these hurdles, opportunities are emerging. Africa’s young population, over 60% under the age of 25—represents a massive potential workforce. If properly trained, these youth could power a new industrial revolution. Furthermore, with global demand rising for minerals critical to clean energy and AI technologies, African countries are in a strong position—if they can move up the value chain. Rather than just exporting raw materials, we must invest in local processing and manufacturing. The African Continental Free Trade Area (AfCFTA) could also be a game-changer if member states actively reduce trade barriers and invest in cross-border infrastructure.
The road ahead won’t be easy, but it’s necessary. Stories like that of Christelle Kwizera—who built a thriving water infrastructure company in Rwanda without major foreign aid—show what’s possible with local vision and commitment. Africa must stop waiting for external salvation and start building from within. That means leveraging the informal sector, investing in youth, tightening financial governance, and boldly backing local enterprise. If we get this right, Africa will not just survive the end of aid—it will thrive beyond it.
Source: Business Day