The political economy of growth without development has become one of the most pressing issues facing countries across the globe.

In Africa, many countries with sustained economic growth continue to display extreme levels of inequality and poverty. Access to higher education, with an overall rate of 7 per cent of the population, is the lowest in the world.

Despite the continent being one of the biggest producers of petroleum and having huge hydropower capacity, 621 million Africans don’t have access to electricity. The risk of a child dying before completing five years of age is still highest in the world — 81 per 1,000 live birth — about seven times higher than that in Europe.

Understanding the causes of this paradox is likely to dominate the next decade of policy thinking.

Addressing these causes will constitute a key aspect of support to governments as they come to the realisation that reducing poverty and inequality is not only essential to ensuring sustainable development, but is also necessary for peace and security.

While there is a profusion of literature on manifestations of growth without development, when it comes to how this anomaly can be rectified, the research gets thinner — and yet there is a need to fine-tune our understanding of the phenomenon in order to better inform policy-making.

One emerging understanding is that growth needs to be accompanied by sound fiscal and social policies if it is to have a tangible impact on inequalities and poverty eradication. This means that the state needs to make large-scale investments in education and health to reach all sectors of the population.

Today, the average portion of GDP spent on education in Africa is around 5 per cent, with an enrolment rate of close to 80 per cent in primary school, a rate that drops to half of that for secondary school enrolment. This level of investment remains insufficient to catch up with more developed parts of the world.

In order to increase the share of investment allocated to key sectors for human development, both in terms of infrastructure and training, states should tap into two huge sources of revenue:

First, they need to enhance tax collection. It is estimated that achieving just one per cent tax efficiency would generate $30 billion and two per cent would unlock an amount that would exceed international aid. ut due to corruption, the bulk of these potential resources is lost. The development paradigm should thus shift from aid to enhancing fiscal policy and tax collection efficiency. Formulating fiscal policies that target 10 to 15 per cent of GDP through tax collection should be a top priority.

Second, revenue can be increased by placing more emphasis on the taxation of foreign companies in Africa. Recent statistics show that while large foreign companies generate profits that can reach up to 10 per cent of hosting countries’ GDP, they are almost entirely repatriated to the country of origin. Besides, the host countries also lose a lot through tax havens.

Investing in sectors such as health and education is critical, but new policy thinking should go further in order to truly make growth inclusive. There is also a need to account for the factors of change that are shaping tomorrow’s African political economy.

Demography is the first one of these factors. It is estimated that Africa’s population will have risen to 4.4 billion by 2100. The number of African cities of over 1 million inhabitants had grown from three in 1960 to 54 in 2013, and is expected to reach 100 by 2030.

This means we need a paradigm shift in the way we address the needs of the poor in slums and in the suburbs of megacities. It also implies that profound changes in the African agricultural production model will need to take place in order to match the increase in food needs, making industrialisation and mechanisation a priority in the decades to come. We need to anticipate a significant reduction in the labour force in this sector.

The second of these factors is entrepreneurship. In 2014, 26 per cent of Africans created businesses, compared with 7.4 per cent in Europe and 13.4 per cent in the US. These entrepreneurs need the support of the state to improve their business environment and to capitalise on their initiatives to create value, enable job creation and stimulate investment.

This will happen through the improvement of public service delivery and the development of entrepreneurial skills, capacity and innovation particularly in the areas of technology, communications and entertainment. It will be important to value, capitalise on and promote national resources, ownership and initiatives in order to create new markets and growth sectors that benefit the country as a whole.

A third factor to account for is the growth of the renewable energy sector. Climate change is having devastating effects, not only on the environment, but also on the economy.

Unep has estimated in a recent study that Africa is already facing adaptation costs of $7 billion to $15 billion per year by 2020. Hence any effort to foster development should include climate change adaptation strategies that focus on building resilience to extreme weather events such as droughts and floods, which affects the most vulnerable populations.

Lastly, the explosion of the information technologies sector needs to be appreciated. Africa counts roughly 850 million mobile phone users, 200 million Internet users and 120 million Facebook subscribers.

The IT boom is changing the way people conduct business, expanding their access to the market, and providing worldwide connectivity.

The old-fashioned idea that Africa is rural and backward is changing fast. Recent developments in the political sphere reflect a societal transformation that places the civil society at the forefront, with higher expectations in terms of accountability.

States that continue to underperform on public service delivery, particularly education and health, fail to tackle corruption, encourage elite resource capture and mismanage public funds will increasingly be held accountable to the people and placed under scrutiny for their actions.

Privileges for international companies to conduct near to tax-free business and exercise their monopoly in lucrative business sectors in Africa will end sooner than anticipated. These are the new realities that we need to account for, and that we need to feed into our conceptualisation of pro-poor policies.

Jean-Luc Stalon is the Senior Deputy Country Director of UNDP Mali. His background is development economics, policy analysis and conflict or crisis related issues.