In Ndera, a peri-urban suburb of Kigali, Umuhoza, a vendor of grilled maize, begins her day navigating complex economic choices, ones that would challenge even a seasoned behavioural economist. She must calculate how much charcoal to buy, assess the market price of maize, budget for her child’s education, and consider the threat of rain wiping out a day’s earnings. Umuhoza embodies both rational economic decision-making and entrepreneurial spirit. Yet, the system she operates in is designed to keep her and millions like her—in perpetual precarity. For decades, the prescribed solution for people like Umuhoza across Africa and the Global South has been a harsh cocktail of austerity, privatisation, and liberalisation. This formula, known as the Washington Consensus, was promoted by international financial institutions (IFIs) under the assumption that minimal state involvement and open markets would unlock foreign investment and fuel prosperity. That promise never materialised. Instead, it eroded local industries, undermined public services, and deepened vulnerability. Austerity hollowed out healthcare and education systems. Privatisation raised costs for basic services without expanding access. Financial liberalisation triggered capital flight and economic volatility instead of empowering local enterprise. The result? Rising inequality, worsening poverty, and economies still locked in the export of raw commodities—cocoa, coltan, crude oil—leaving nations vulnerable to global price shocks. The Washington Consensus has failed. It ignored local contexts, devalued human well-being, and failed to generate inclusive growth. What’s needed now is not a minor policy tweak, but a fundamental shift in economic thinking. This new paradigm does not advocate a return to outdated state-led models. Instead, it proposes a bold synthesis: heterodox economics, behavioural insights, and a modern understanding of monetary sovereignty—all anchored in a mission to reclaim economic agency. 1. Reclaiming the role of the State Africa must reject the myth of the passive, minimalist state. Thriving economies are built by proactive, entrepreneurial states that shape markets and drive innovation. The East Asian economic miracles weren’t market accidents; they were the outcome of deliberate industrial policy, long-term public investment, and strategic state involvement. For Africa, this means moving beyond exporting raw commodities and building local value chains. Industrial policies should target key sectors—pharmaceuticals, renewable energy, agro-processing, data infrastructure—and provide tailored support through R&D grants, export incentives, and public procurement. The state’s role isn’t to micromanage but to act as a catalyst and venture capitalist for national development. 2. Rethinking public finance: The power of sovereign currency For too long, African finance ministers have operated under orthodox constraints—fearing budget deficits and obsessing over debt-to-GDP ratios. Modern Monetary Theory (MMT) offers a radical reframe: countries that issue their own currency, like the Rwandan Franc or Kenyan Shilling, cannot go bankrupt in that currency. Their spending capacity is limited not by revenue or borrowing, but by real resources—labour, infrastructure, and inflationary risk. This shifts the policy question from “Can we afford it?” to “Do we have the capacity to build it?” Universal healthcare, quality education, and infrastructure shouldn’t hinge on donor funding or IFI approval. Mobilising domestic resources to fund foundational investments doesn’t crowd out private enterprise—it attracts it, by cultivating a healthier, more educated workforce and a stronger economic base. 3. Designing policy for real people Umuhoza’s challenges aren’t just economic—they’re behavioural. Behavioural economics shows how small frictions can block rational choices. If the nearest bank is far and the paperwork overwhelming, she won’t save. If credit is only available at exorbitant rates, she can’t grow her business. A state guided by behavioural insights would remove these barriers. It would promote mobile money for savings and payments, offer low-interest loans through public patient capital funds, and simplify taxes for small businesses. Nudges can encourage formalisation, and safety nets must be accessible and dignified—not bureaucratic labyrinths. 4. Building a continental vision This transformation must be pan-African. The African Continental Free Trade Area (AfCFTA) should be more than a trade pact—it must lay the foundation for coordinated industrial policy, shared infrastructure, and a unified global voice. By building regional value chains, Africa can create a self-sustaining market of 1.4 billion people—fertile ground for innovation driven by African ingenuity, not the whims of foreign capital. 5. Choosing courage over conformity The path forward demands boldness. African leaders must have the courage to reject outdated prescriptions and chart a new course—one rooted in sovereignty, inclusiveness, and long-term thinking. Public institutions must be capacitated, not weakened. The priority must shift from satisfying foreign creditors to empowering citizens. For Umuhoza, this shift could change everything. It could mean reliable public healthcare, an affordable loan to expand her business, or a paved road that lowers her costs. It means her work would no longer be a daily fight for survival but a step toward a better future. That is the Africa we must imagine—and build. The author is an African scholar, analyst, and commentator on economic and political affairs.
