Africa needs to pay special attention to inclusive growth by creating youth employment, improving agricultural output and investing in quality education and infrastructure.
In a well-attended public lecture delivered in Kampala, Uganda, the President said the continent's demographics pointed to an explosion in the numbers of young people, though employment creation was not keeping pace. He lamented the fact that youth unemployment, at 20 percent last year, remains way above the global average of 10 percent.
"The quality of Africa's growth during the past decade has not been inclusive, with too few jobs created especially for the young people in the booming economies. The events of the Arab Spring have shown us the paradox of high growth and rising inequality and unemployment (which) requires all of us to reflect seriously on the causes," said Kaberuka.
The lecture, titled: "Economic Growth and Economic Transformation", was moderated by the Deputy Governor of the Bank of Uganda, Dr. Louis Kasekende.
Kaberuka said Africa has to continue investing heavily in infrastructure if it is catalyze growth, adding that Africa requires US $360 billion in infrastructure investments over the next 30 years, while the energy needs will also multiply.
These kinds of investments requires innovative financing, such as issuance of infrastructure bonds, which have become important for the mobilization of infrastructure financing and the development of domestic capital markets.
Kaberuka reiterated his call for the establishment of an African infrastructure bond to be financed using a fraction of funds held overseas by Africa's Central Banks.
"We have estimated that if only 5% of these reserves are invested with the African Development Bank, a triple-A rated institution, to invest in infrastructure, it would amount to US $22 billion," said the President.
Kaberuka argued that economic transformation is characterized by at least three key features, starting with the structure of the economy changing to depict an increase in the share of manufacturing, coupled with a sustained decline in the share of agriculture.
This is followed by the share of agriculture employment falling, while the share of total labour force in other sectors of the economy increases, and finally, economic activity shifts from rural areas to the cities leading to an increase in the degree of urbanization.
"Therefore, economic transformation is a comprehensive change that encompasses the modernization of a country's economy, society and institutions. In countries where economic transformation has taken place, the middle class has become larger; changes have happened in the way politics works, with emphasis on market-friendly policies; and government has become more effective," said Kaberuka.
In all cases, where economic transformation has succeeded, the articulation of a national vision to motivate the people has been crucial.
He added that though African countries have made valiant efforts towards freeing the continent from ignorance, poverty and disease, more needed to be done.
"For while you can have growth without economic transformation, you can never have economic transformation without growth," said Kaberuka.
He gave the examples of Brazil, China and South Korea as countries which had leap-frogged developmental stages because of putting in place policies that led to a boost in growth.
The President called for more investments in agricultural R&D as well as increasing land under irrigation.
"It is significant that only 4% of food crops in Africa are irrigated compared to 30% in Asia," he said.
Urging for increased investment in education, Kaberuka said this is the only panacea for eradication poverty.
"There is broad agreement that the best way to end the transmission of poverty from one generation to the other is quality education to the children of the poor," he said.