Weak institutions, low productivity fueling Africa’s poverty- Paul Alaje

Paul Alaje, a senior economist, said on Saturday that Africa’s poverty crisis is being driven by weak institutions, low productivity and a failure to convert potential into economic progress, urging Nigeria to lead reforms across the continent.

Speaking at the Paul Alaje Colloquium in Abuja, he said the continent’s challenges were structural rather than resource-based.

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“Poverty thrives through weak or captured institutions,” he told delegates from across Africa, adding that the region continued to struggle because “low productivity and high underemployment” had become entrenched in many economies.

Mr Alaje said Africa’s economic weaknesses were compounded by insecurity, poor governance, limited technological adoption and the difficulty of moving goods and people across borders.

He noted that “poverty is not just a shortage of income, but a systematic condition,” arguing that the continent must break the system that sustains underdevelopment.

He said Africa’s development path could draw lessons from countries such as South Korea, Rwanda, Singapore, Botswana and post-war Germany, which used strong institutions, industrial strategy and investment in skills to lift millions out of poverty.

Mr Alaje laid out four pillars for reversing Africa’s decline, economic transformation, governance, security, and technology, and said Nigeria must prioritise production over imports, expand regional value chains, stabilise macroeconomic policy and invest in broadband, digital identity and technical skills.

He added that stronger cross-border cooperation, easier travel within Africa and security partnerships were essential for growth.

He warned that industrialisation would not succeed without credible public institutions, digital public services, reliable power, improved transport links and a stable currency.

He also called for anti-corruption reforms, community-based security, modern surveillance tools and more support for small firms and vocational training.

Mr Alaje urged African governments to remove barriers to trade, simplify visa rules, and align regulatory systems to encourage continental integration.

He said prosperity would depend on how effectively African countries strengthened governance, built human capital and expanded access to technology. “We rise together, or we fall alone,” he said.

After a long period of rising prices, inflation in Nigeria has started to ease, but a volatile currency, weak industrial output, and persistent insecurity continue to challenge farming and trade.

The African Continental Free Trade Area (AfCFTA) aims to boost regional trade, but implementation has been uneven and intra-African commerce remains low.

Many African countries face widening inequality, youth unemployment and slow productivity growth, despite abundant natural resources and a growing population.

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Recent World Bank data show that about 61 per cent of Nigerians (roughly 139 million people) were living below the international poverty line of US$ 3 a day in 2025.

Roughly, 464 million Africans are living in extreme poverty, with the continent’s overall poverty rate estimated at 43.9 percent .

The World Bank noted that expected economic growth would likely only reduce poverty modestly, as limited job creation and structural challenges continue to hold back progress.