The end of manufacturing thang

July 14, 2026

A development publication/newsletter called Development Front ran a review of How Africa Works written by former World Bank vice president Hafez Ghanem. The review is below (or you can read the original here) and a response from me to some of the points made is below that. I don’t think it is a great quality review, but the whole ‘end of manufacturing as we know it’ discourse is important and needs to be addressed.

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How Africa Works: Success and Failure on the World’s Last Developmental Frontier, Joe Studwell, Atlantic Monthly Press, 448 pp., $32, February 2026

Joe Studwell has spent most of his career working on Asia and brings an interesting fresh perspective on the economics of Africa. This makes the book worth reading even if one disagrees with some conclusions.   The book’s main argument is that Africa should follow the Asian model of first focusing on smallholder agriculture, then labor intensive manufacturing exports, and finally move to high value-added services.  Studwell is against leapfrogging directly to higher value manufacturing or services, which he argues is dangerous.   To make his case he uses four country case studies, Botswana, Mauritius, Ethiopia and Rwanda.

This review does not follow the same structure as the book.  It starts with a discussion of the constraints to Africa’s development as presented by Studwell, then moves to his main argument that Africa should follow the Asian growth model and then to the country case studies.  It concludes by explaining why Studwell may have gotten it wrong.  The development strategy that worked for Asia in the middle of the 20th century will probably not work for Africa in 2026, proposing a different strategy that brings together lessons from Asia’s experience and African successes.

Constraints to Africa’s Development

Perhaps the most intriguing part of the book is Studwell’s explanation of why Africa lags the rest of the world in economic development.   Unlike traditional development economists who focus on governance problems and the colonial legacy, Studwell focusses on demography and low population density.   It is a novel but plausible argument that implies that today’s high African population growth rates, coupled with rapid urbanization, could actually help bring about faster economic development and poverty reduction.

Studwell argues that Africa’s relative poverty derives from three historical factors.  First, is low population density which made economic development virtually impossible in the absence of concentrated markets and adequate labor supply.   Development was also unfeasibly expensive in terms of per capita infrastructure costs.   Second, is the legacy of “low budget colonialism.”   Because low population density made it more difficult to raise taxes, colonial powers in Africa built isolated enclaves of mineral and agricultural commodity exploitation, ignoring much of the rest of their colonies.  failing to invest in education or health.  Third, because of low population density and low budget colonialism, independence found most African societies dispersed, uneducated and politically unorganized.  Studwell argues that it is these impediments rather than corruption or ethnic violence that constrained the continent’s economic development.

The good news is that by 2030 Africa will have Asia’s population density in 1960.   That is why Studwell believes that Africa’s economic prospects look better than ever.  He argues that Africa should simply follow in Asia’s footsteps.

The Main Message

How Africa Works is a follow up on Studwell’s well-known book, How Asia Works. There, he argued that successful East Asian economies—Japan, South Korea, China, and Vietnam—followed the same developmental sequence: land reform and smallholder agricultural growth, followed by labor-intensive export-oriented manufacturing; and supported by financial systems that assured the flow of resources to priority areas through capital controls and directed credit.  In How Africa Works, he asks whether these would work in  Africa.  His answer is yes.  He distances himself from narratives portraying digital technology or entrepreneurship as substitutes for manufacturing-led development.  He insists on the centrality of productive transformation: poor countries become rich by increasing productivity in agriculture and manufacturing.

Studwell’s argument goes against most recent development literature which states that with increasing protectionism and de-globalization and technological change, the development path based on labor intensive manufacturing exports is no longer available. Dani Rodrik (2026) states that: “As manufacturing technologies became more sophisticated and the failure of countries outside East Asia to industrialize successfully became more apparent, I began to consider alternative growth strategies not because I came to think of broad-based industrialization as less desirable, but because I became convinced that it is less feasible.” Rodrik now argues for a model of economic growth emphasizing the development of productive capabilities in labor-absorbing non-tradeable services. He warns African policymakers that trying to emulate the Asian model would at best produce manufacturing enclaves connected to global value chains, while the bulk of the labor force will remain stuck in low productivity activities.  Rodrik’s advice is the exact opposite of Studwell’s.

Brookings’ Coulibaly and Page (2021) reach a conclusion similar to Rodrik’s.  They consider sectors they call “industries without smokestacks (IWOSS) with four characteristics: they are tradable, have high value added per worker, exhibit capacity for technological change and productivity growth, and show evidence of scale and/or agglomeration economies.   This includes sectors like horticulture and high value agribusiness, tourism, business services, transport and logistics.   Looking at case studies from South Africa, Rwanda, Senegal, Ghana, Uganda, and Kenya, they find that all IWOSS sectors in those countries are labor intensive.  Moreover, labor productivity in the IWOSS sectors in all countries except Ghana were higher than labor productivity in manufacturing.  In Ghana labor productivity in manufacturing and in IWOSS were equivalent. In all countries IWOSS had better growth potential than manufacturing.  They conclude that developing IWOSS, not labor-intensive manufacturing, is the way to solve Africa’s youth employment problem and creating formal productive jobs at scale.

A 2017 joint report by the World Bank and the China Development Bank also argues that Africa does not have to follow the Asian development path, adding that major changes brought about by the digital revolution make leapfrogging in Africa not only possible but necessary. Eschewing Studwell’s advice on the dangers of leapfrogging they conclude that attracting private investment and creating an enabling environment for technological diffusion is precisely how Africa will harness innovation for development.

Country Case Studies

The book’s analytical core lies in its country studies:  Mauritius, Botswana, Ethiopia, and Rwanda, all presented as “early movers” and hence success stories demonstrating both the possibilities and limitations of African development.  However, they are not representative of the continent. All are mostly Anglophone (Mauritius is bilingual and Rwanda moved from French to English after the genocide) and are in East and Southern Africa.  A book aiming to be relevant to all 54 African countries would have benefitted from including West African Francophone countries and Maghreb’s Arab countries.  The successful experiences of countries like Cote d’Ivoire or Morocco would have added depth and credibility to the analysis.  It would have also been useful to add case studies from Africa’s largest economies: South Africa, Nigeria, Angola and Egypt, even if they have not been particularly successful.

Mauritius is a success story that Studwell says achieved “something right in paradise;” with inclusive political coalitions, export-oriented industrialization, and strategic economic diversification.  Studwell points all this out but fails to explain that the Mauritian example is virtually impossible to replicate today for three main reasons.   First, is size.  Mauritius has 1.3 million people – one can drive around the whole island in an afternoon.   Clearly, it is easier to achieve political consensus in Mauritius than in Nigeria with 235 million people.  Size also matters economically.   A Mauritian minister once explained that to achieve their employment and foreign exchange objectives they only needed less than 0.1 percent share of the world market.   Hence, other countries do not consider Mauritius threatening.  Studwell argues that small economies often outperform larger ones with something to be learned from them.   There may be some truth to that, but it is not at all clear that large countries can follow the same political and economic path as a small island economy.   Second are international ties.   Mauritius has an important French-speaking elite with links to France which allowed favorable treatment for sugar exports to the European Union.  Also, most Mauritians are of Indian descent helping relations with the large Indian market, especially in financial services.  Third is timing. Mauritius gained independence in 1968 and started its economic development when world markets were opening and low wage developing countries had a clear advantage in labor intensive manufacturing.  Today, there is a worldwide rise in protectionism and technological advances, and the use of robotics make low wages less of an advantage.

Botswana is presented as a partial success story.  Studwell refers to it as “meritocracy without a vision”. Studwell’s analysis of Botswana is different from traditional development economists who only point to success at building strong institutions and making good use of its mineral wealth.  While acknowledging the country’s impressive growth and governance record, Studwell criticizes its failure to put in place inclusive agricultural and manufacturing policies.  He argues that because of this failure the country has ended up with chronically high unemployment, extreme inequality and an unhappy society.  Studwell may be a bit harsh on Botswana.  After all, Botswana is considered a model among African mineral producers because its negotiations with DeBeers succeeded in securing increased domestic diamond sorting, trading, and started building an industrial sector based on processing its natural resources.

It is not clear how Botswana is relevant to the book’s main argument.  Botswana never tried to implement the Asian model, focusing neither on smallholder agriculture nor labor-intensive manufacturing exports.  Its success was based on the judicious use of revenues from diamond exports and developing a domestic diamond processing industry.

An important feature of the Mauritian and Botswanan experiences — only mentioned in two sentences –is that both countries are South Africa’s neighbors.  They both started their development programs in the 1960s and 70s when South Africa was ruled by a racist regime.  Both countries did not join the rest of Africa in confronting apartheid South Africa.   This helped them achieve better economic performance than front-line states like Zambia under Kenneth Kaunda or Julius Nyrere’s Tanzania.  Led by Kaunda and Nyrere, the rest of Africa cut economic ties with the apartheid regime and succeeded in mobilizing international support for Nelson Mandella and his freedom fighters, bringing democracy to South Africa.  The decision by Mauritius and Botswana to prioritize the economy over the fight for dignity and equality is not one supported by most Africans.

According to Studwell, Ethiopian is “all in on the Asian model.”   Meles Zenawi who led Ethiopia from 1991 until his death in 2012 was a student of Asian economies and replicated their experiences; prioritizing smallholder agriculture and manufacturing exports while using capital controls and directed credit, ensuring that resources flowed to priority activities.   Meles’s successors stuck with the Asian model and the country had excellent economic results.   A country that was suffering from famines in the 1980s grew its GDP per capita by 3.6 times in thirty years and brought about great increases in agricultural productivity and food security, as well as in poverty reduction.  But not everything worked well in Ethiopia.   The government created public sector conglomerates who face no competition, are inefficient and suppress private sector activity.   It also embarked on large mega-projects without sufficient preparation, which led to huge waste.   The best example of this is a never completed $5 billion 175-thousand-hectare irrigated sugar scheme.

Ethiopia’s greatest failure is its inability to develop a truly multi-ethnic coalition for economic development.  The federal model put in place by Meles broke apart under ethnic tensions and the country descended into civil war, with huge human and economic costs.   The challenge facing Ethiopia today is how to stabilize the country and build consensus for a peaceful multi-ethnic society with a commensurate economic development program.

Studwell uses Ethiopia as an example of the Asia model working in Africa, but Rodrik (2026) interprets it differently.   He thinks the Asian model did not succeed in Ethiopia, pointing out the growth of manufacturing in Ethiopia through small-scale, mostly informal, enterprises at the expense of productivity.   Expansions of manufacturing employment and increases in manufacturing productivity went hand in hand in early Asian industrializers.   They moved in opposite directions in Ethiopia.

Moreover, the civil war and ethnic tensions in Ethiopia may be an indication that the Asian model cannot work in multi-ethnic African countries.  Successful Asian countries were mostly mono-ethnic, while nearly all African countries are more like Ethiopia with multiple ethnicities, languages and religions.   Applying the Asian model of a strong central government picking winners and losers and determining where credit and investment flows in a multi-ethnic society could lead to either of two outcomes, both negative.  First, the competition for control of resources among different ethnic groups could degenerate into unrest and even civil war as in Ethiopia.  The second possibility is that the ruling elite allocates resources in a way that appeases different ethnic groups rather than maximizes economic benefits, which usually implies inefficiencies and often corruption.

Studwell describes Rwanda as “Singapore in Central Africa.”   When Paul Kagame and his Rwanda Patriotic Front (RPF) marched into Kigali in 1994, they found a city littered with bodies.  Three-quarters of Rwanda’s Tutsis lost their lives during the genocide. Kagame, himself a Tutsi, was able to pacify the country and grow its economy at phenomenal rates.   It is a truly inspirational story.

Kagame’s role model was Lee Kwan Yew, Singapore’s first Prime Minister who put the island on the road to becoming one of the most successful economies in the world.   Lee believed in Asian values that prioritized communitarianism as a necessity for social cohesion, political stability, and rapid economic growth.  This took precedence over democracy and human rights.    At the same time, Lee ran an efficient and transparent government that was focused on economic development, achieving excellent results.

Kagame’s first economic program, Vision 2020, had six priorities: (1) good governance and state capacity development; (2) investment in education; (3) private sector growth; (4) infrastructure development with a special focus on high-speed internet; (5) household agriculture; and (6) trade and regional integration.  Success ensued, Rwanda grew by 7-8% a year, GNI per capita rose from $270 in 2000 to $1,040 in 2024.

However, Rwanda’s experience does not support Studwell’s view that Africa should simply copy the Asian model of focusing on agriculture and labor-intensive manufacturing, using capital controls and directed credit to ensure resources flow to priority areas.  There are three reasons for this.  First, Rwanda did not use capital controls and directed credit.  It kept an open capital account, allowing the free movement of money.  State-owned banks were sold off to foreign investors and new foreign banks were allowed to operate. Second, Rwanda’s growth did not come from agriculture or from manufacturing.  It came from high value tradeable services: transportation, trading and tourism.  By 2022 half of Rwanda’s GNI came from the services sector.  Third, unlike Studwell, Paul Kagame believed in leapfrogging.  He invested in Rwanda’s digital economy, establishing “Smart Africa” (an organization whose mission is to develop the continent’s digital economy). He continues to chair its board of directors.

What Does This Mean for Africa?

Studwell’s statement on page 8 of his book that: “I have found that the policies that were effective in Asia are the same ones that have worked in a handful of cases of early success in Africa” is not supported by his own case studies.  Only Mauritius could be described as a successful implementation of the Asian model.   But Mauritius started its development program early–before the digital revolution and the increased use of robotics–and its size and geography are atypical.   Ethiopia implemented the Asian model, and its focus on agriculture has reduced poverty and improved food security.  However, Ethiopia today—with civil war and a low productivity manufacturing sector–cannot be considered a success story.  Botswana’s success is due to judicious management of its mineral resources.   It never tried to emulate Asia and develop smallholder agriculture or labor-intensive manufacturing.    Rwanda did exactly what Studwell warns against.  It leapfrogged into high value services and the digital economy.     It did develop some industrial zones but the share of manufacturing and agriculture in its GDP declined while the share of services increased.

Nevertheless, Studwell’s “How Africa Works” contains at least five valuable lessons.  First, building political consensus around a development project and a vision for the future is a prerequisite for successful economic development.  Mauritius achieved this in the context of a parliamentary democracy, while Rwanda—like Singapore– achieved it within a more centralized, authoritarian political system.  Second, on a continent where some 70 percent of the population depends on agriculture for a living, an early focus on developing smallholder agriculture is key for poverty reduction and food security.   This is the lesson that can be drawn from the Ethiopia case study.  Third, mineral rich African countries need to strengthen management of the rent from natural resource and put in place systems to encourage domestic refining and processing rather than exporting raw materials.  The key lesson from the Botswana case study.  Fourth, it is important to invest in education and in digital infrastructure and grow high value-added services.  That is the message of the Rwanda case study.  Fifth, developing high value-added services does not mean neglecting manufacturing.  All four countries continue to develop their manufacturing sectors, but they cannot depend solely on manufacturing to create the high growth and jobs that their populations need.

“How Africa Works” is certainly worth reading, even if one disagrees with its main message.  Studwell’s argument that low demographic density is the main explanation for Africa’s development challenges is new and plausible.   More work in this area, especially trying to understand how rapid urbanization is changing Africa’s development prospects is needed.  The conventional wisdom that Africa’s population growth is bad for development and poverty reduction may be wrong.  The country case studies are well researched and provide many useful information, even for an old Africa hand.  Moreover, the book’s style is engaging and easy to follow.

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I was asked by the editor to respond. Here is what I wrote:

Sir,

I reply to Hafez Ghanem’s review of my book How Africa Works.

Part of the problem with economic development as a subject is that it is boring. The same optimum pattern of smallholder agriculture, export-oriented manufacturing and financial arrangements that support these two sectors through directed credit and capital controls runs from the United States of the 19th century to the European catch-up states beginning in the late 19th century to the post-Second World War Asian tigers/ dragons/ ‘miracles’. The consistent historical pattern is too dull for economists – and their friends in the aid industry – so they quest assiduously for novel explanations of what is required.

We live today amidst an intellectual ‘new paradigm’ frenzy. The ferment is driven by speculation about digital economies, robotics and artificial intelligence (AI). Mr Ghanem notes in his review that one of the most important development economists of the age, Dani Rodrik, has declared that manufacturing-based development will not occur in Africa.

For those of us who are sceptical of a ‘new paradigm’ – as opposed to incremental technological change – the problem is that the conversation is a very loose one. Those who speak of a robotics and an AI revolution in manufacturing talk only about the technology and do not talk about the cost. Yet cost is the decider in real firms. Robots require outlays of tens and hundreds of thousands of dollars per unit. Meanwhile, labour in African countries now costs US$70 to US120 per month – one tenth to one sixth that in China.

Next comes the issue of flexibility. Robots and AI are sunk, upfront costs. Labour in African countries is something you hire and fire as you need it – just like in Asia in its take-off era. In short, the fact that US$700 a month factory labour and a falling population mean Chinese firms are turning to robotics and AI does not mean they will inevitably be more competitive than African factories and does not mean African factories should do the same thing.

Mr Ghanem highlights Ethiopia as proving the impossibility of African industrialisation. He quotes Dani Rodrik saying an East Asian manufacturing strategy failed in Ethiopia. But did it? A raft of new investment zones had only two years of operations before the 2020-22 civil broke out. Messrs Ghanem and Rodrik should pay a visit today. Investment zones are filling up, import substitution programmes are being completed, plants are increasingly capital intensive – from multiple factories working steel billets to a first integrated steel plant under construction and other new industrial product lines like plate glass. Try telling an Ethiopian minister that manufacturing is not going to happen in their country.

The nation held up as the bellwether by the digital evangelists is India. Certainly, India did well in the past three decades compared with its miserable economic performance between 1947 and 1991. Since then, the country averaged 4.2 percent growth while developing a substantial digital sub-economy and ignoring the traditional requirement for a manufacturing focus. But how impressed should we be? Not very. From 1980, China grew for three decades at more than 10 percent a year and today has an economy four times the size of India’s, largely because of its commitment to manufacturing. When people say the best African countries can hope for is an Indian growth rate, it is a fundamentally racist statement.

Mr Ghanem also references another very loosely employed argument to show that Africa has no manufacturing future – the notion that increasing global protection excludes Africa from overseas markets. But rising protection is not directed at Africa. Protection is tariffs on China and China’s reciprocal response to developed countries outside Africa. African states have only been affected, temporarily, by Trump tariffs. Most African states enjoy tariff free access for a wide range of products in the EU, and in China. Protectionism is not stopping the growth of African manufacturing. Furthermore, a great deal of goods export growth in Africa will come not from sales to other parts of the world, but instead from sales between the continent’s 55 countries.

It won’t be digital revolution or tariff barriers that decide developmental trajectories in Africa, but rather (very varied) state capability in the context of circumstances that increasingly favour African industrialisation. Rising population density, an African GDP growth rate that ticked up markedly since the start of the century and urban markets demanding a full range of consumer goods and construction materials mean that there are attractive manufacturing opportunities in Africa like never before.

To give one example, the price of steel in China, where growth has slowed and steel is in chronic oversupply, has fallen to US$550 per ton. Across Africa, where steel is demanded for infrastructure, for urban real estate and as an input in many downstream businesses, steel fetches between US$850 and US$1,200 per ton. So it is no surprise that Chinese firms are shipping steel plants to Africa. Their local production in turn stimulates more investment in downstream factories that use steel. Large Chinese steel plants have been built in Algeria, Zimbabwe and South Africa and signed in Ethiopia.

According to the firm level FDI database collated by the Financial Times, last year Chinese firms invested US$12.5bn in manufacturing plants in Africa. The main driver was better margins than they could achieve at home. Someone needs to tell these people that manufacturing is not going to work in Africa.

There is no doubt that the technological background against which economic development occurs has changed. Since 2000, the services share of global trade increased from 20 percent to about 28 percent. This reflects the raft of new opportunities for developing countries to export services such as business processing outsourcing (BPO), software and other professional services. Governments need to take these opportunities seriously. But that is not the same as ignoring the manufactured goods that still constitute 72 percent of world trade. In my view, anyone who tells African countries to ignore manufacturing is doing the continent a frightening disservice. Fortunately, there is no indication that in countries like Ethiopia people are listening.

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The Wire China

May 30, 2026

At the end of this paragraph is a link to the Wire China article in PDF, with all photos and graphs, about How Africa Works, and connected Asian issues. Below is the text with some textual illustrations but no photos or graphs. The Wire China Joe-Studwell-on-Getting-Africas-Economies-to-Work

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Q & A

Joe Studwell on Getting Africa’s Economies to Work

The author and journalist discusses whether the ‘Asian tigers’ model is one African countries can emulate, and China’s influence over the region’s development.

By Andrew Peaple — May 24, 2026

Economy

Joe Studwell’s 2013 book How Asia Works was a groundbreaking analysis of the rise of East Asia’s ‘tiger economies’, South Korea, Japan and Taiwan. In it, the British journalist and author showed how those countries had achieved success by pursuing state-led industrial and agricultural policies while limiting capital flows — a policy mix that ran counter to prevailing economic orthodoxy. In his new book, How Africa Works, Studwell takes a similar look at the world’s poorest region, and asks whether a similar policy mix could and should work there.

In a recent interview Studwell discussed the book’s main arguments and the role of China in African economies. The following is an edited transcript of that conversation.

 

Q: Can you start by explaining the similarities between Africa and Asia in terms of the economic development model that they could or should be following? 

A: Broadly the same policies that worked in East Asia have worked in a very small number of countries in Africa that have developed quickly. The first element is the same emphasis on smallholder agriculture and achieving an agricultural surplus, so that there are broadly distributed gains across society, meaning that essentially everyone’s in the capitalist game.

A second factor is the role of manufacturing and manufacturing policy. That has been important in the small number of countries in Africa that have so far undergone rapid development. And a third factor is financial controls, or what is sometimes called financial repression. The objective of that is to trap money in your country so that you can deploy it for domestic development, rather than letting it run off looking for higher returns elsewhere.

These policies are the connection between the small number of successful African countries and East Asia. But the context is massively different.

BIO AT A GLANCE
AGE 58
BIRTHPLACE Bradford, Yorkshire, England, UK
CURRENT POSITION Senior Visiting Fellow, Overseas Development Institute (ODI)

The striking thing about How Asia Works was the way it challenged the so-called Washington consensus — that free markets and free flows of capital are what developing countries should adopt. You pointed to the fact that state involvement and capital controls helped development in the countries that had success in Asia.

Where the state is sufficiently capable, it plays a big big role in developing countries, because you don’t have a developed private sector that can do things on its own. You need the state to act.

If you read the academic literature over the last 50 years, most of it will tell you that it’s been governance failures — corruption, kleptocracy, civil strife, particularly ethnic strife. But the book that I’ve written argues something different — that the fundamental difference and problem in Africa was demographic. 

Of course, this is not just an Asian thing: it’s not just about the Ministry of International Trade and Industry (MITI) in Japan or the National Development and Reform Commission (NDRC) in China, or the planning agencies in Korea or Taiwan that took a very proactive role in framing the development of their economies. This has happened previously, with the catch-up countries in Europe, and it happened in the United States as well, going back to the 19th century. It’s a universal truth that if you do have a sufficiently capable state, it can very usefully do a lot in the early stages of development.

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In general terms, why is it that African countries haven’t been able to adopt the same kind of economic model that has worked in Asia?

If you read the academic literature over the last 50 years, most of it will tell you that it’s been governance failures — corruption, kleptocracy, civil strife, particularly ethnic strife. But the book that I’ve written argues something different — that the fundamental difference and problem in Africa was demographic.

It’s a vast continent: you can put Europe, India, China and the U.S. into Africa, that’s how huge it is. Because of its extraordinary and unique disease burden, thanks in particular to the prevalence of parasites unique to Africa, the population grew incredibly slowly for a long time. In 1960, if we take that as the start of the continent’s independence era, the population density in Africa was less than 10 people per square kilometer. For comparison, that is the same as Europe in 1500: there wasn’t much growth in Europe back then, and there wasn’t any growth in Africa for a long period after independence. This was the single biggest constraint.

From the 1950s onwards, though, you start to get new drugs, and the development of health care services and screening for things like sleeping sickness — which still kills vast numbers of people, but not the numbers that it did. That quite quickly reduces the infant mortality rate in Africa from the 1950s. Even within that decade Africa reached the highest rate of population growth, at about 2.4 percent a year, that East Asia ever had, and it went up to a peak of nearly 3 percent a year.

So suddenly you get a massive change. From 230 million people in Africa in 1945, today there’s 1.5 billion today; by 2050 there’s going to be 2.5 billion people, and by the end of the century it’s forecast there will be four billion. That will make Africa one of two dominant demographic blocks in the world, along with Asia. So things have changed very fundamentally there.

When there were 10 people per square kilometer, there weren’t big enough markets: you didn’t have enough people to buy anything that you could produce. Moreover, the costs of infrastructure at a per person level were totally unaffordable. So you couldn’t exploit the resources of Africa, because you couldn’t afford to build the roads and utilities that you would require. You don’t have enough people to have a good division of labor. And you don’t have what economists call the economies of agglomeration — you don’t have cities, apart from anything else. In 1900, Africa only had two cities with 20,000 people — Lagos and Dar Es Salaam. Given the disease burden in Africa, people didn’t live in close proximity because it increased their chances of dying from communicable diseases.

But at the end of this decade, Africa will finally be at the demographic density that Asia had in 1960 — the point when the Asian takeoff began. We can’t say precisely when it will be, but at some point you hit a tipping point where you’ve got enough people so that you can start to do things that you could not otherwise do.

The other huge problem for Africa at independence was that because there had been so few people in Africa, you couldn’t raise taxes. No colonial government, whether it was anglophone, francophone or lusophone, operated schools. They just didn’t have the money. All there was was a small number of missionary operated schools.

So when you kick off in 1960, you’ve got 16 percent literacy in Africa and 5 percent female literacy. It’s only after that point that countries started to generate literate and numerate populations, a fundamental requirement of any modern economy. Actually it’s very under-remarked that Africa did remarkably well in educating its population after 1960. Take someone like Julius Nyerere, who became the leader of independent Tanzania when literacy was 10 percent: he steps down 25 years later, and literacy is 85 percent. A World Bank study said Sub-Saharan Africa was the most rapid rollout, at the biggest scale, of a public education system that has ever happened.

So those are the huge contextual differences: those problems did not exist in Asia. There were always enough people, and colonial governments there operated schools and a reasonable share of people went to them.

 

Can you explain why developing smallholder agriculture is so key to development?

Smallholder agriculture has been key really for distributional reasons. If you get the situation there was in Africa where the population starts to increase almost 3 percent a year, it means that every 25 years, from the 1950s, the population doubled and demand for food tripled. Once people had a bit more money, poorer people spent half or often more than half of their income on food. It was a similar story in East Asia: demand for food went up, and then smallholder farmers started growing crops at increasing yields, and earning greater disposable income. In turn, that means that the early gains in terms of GDP growth are very broadly spread.

One outcome of this is the development of manufacturing and industry in rural areas, as happened in China. A classic example was that of the now Great Wall Motor, based in Baoding, south of Beijing. That firm was originally an agricultural repairs business, repairing agricultural machinery. It’s now the biggest producer of four-wheel drive vehicles in China.

So as agriculture prospers, parts of manufacturing and industry take off in rural areas, and all of this is very positive for development — particularly because while smallholder farmers make a bit of money, they don’t ever make enough money to be buying, say, an imported car. You get this great consumption picture where demand in the economy is for goods which can be produced locally. Farmers want cement, they want bricks, they want glass; and they want farming implements, and then they want household consumer goods, all things that can be produced within the domestic economy. It has a very positive supportive effect for domestic manufacturing.

Now in East Asia, or at least in Northeast Asia (including Vietnam), there was an almost perfect smallholder picture, because it was orchestrated by central governments with land reform measures that divided up the land equally among the farming population.

In Africa, historically there were large plantations which were operated by colonists: there were a dozen settler colonies, of which South Africa is the oldest, where white settlers came and basically grabbed the best land. The settlers tended to operate relatively large farms and they pushed the local indigenous population onto so-called native reserves, where they farmed on communal land and in small holdings.

Africa is so big and has so much cultivable land — even today, the World Bank reckons that half the unused cultivable land in the world is in Africa. The difficulty for the smallholders was that often they couldn’t get on the best land, because it had been grabbed by settlers. When the settlers were eventually driven out after wars of liberation, that land was taken over by new post-colonial governments.

But rather than giving land to the population at large, governments tended to divide it up among supporters of the regime to farm at scale. Land distribution remains a problem most obviously in South Africa. Apartheid ended in 1994, and since then still only about 10 percent of agricultural land has changed hands. They haven’t fundamentally confronted the problem.

Chinese public banks have put about $150 billion dollars of lending into Africa and that’s made a huge difference. 80 percent of the money has gone into infrastructure. It’s generally been very positive, because [China has] delivered at a cost which is significantly below what African governments would have paid to European or U.S. firms. 

However, the more important picture to grasp around Africa at the moment is that suddenly you’ve got nearly 40 cities with more than a million people, and scores more with over half a million. You can go to the periphery of any of these cities and where the city meets the first fields, look at how food is being grown. You’ll find classic smallholder-type farmers who have dug bore holes, who are irrigating their fields, so they can get a couple of crops of vegetables or of rice or whatever. They’re feeding into urban markets that are reliable sources of demand, of a kind that just was not there 20 years ago, and they are making thousands of dollars per hectare from their cultivation. This higher yield farming is going forward without any real government involvement: it’s down to a response to demand and the entrepreneurialism of the farmers.

Often these smallholders have other jobs in the cities. Just to give you examples of the people I met in northern Tanzania: one guy was a senior manager at the country’s driving license agency, farming on the side because it was profitable. Another guy farming tomatoes was a senior policeman. The money to be made in agriculture is sucking in a lot of urban entrepreneurs.

What has impeded Africa’s manufacturing sector to date and what are its prospects now?

Again, I think demographics are key. You need to have sufficient demand and sufficiently concentrated demand for products, because that helps you get through the learning experience with manufacturing.

It’s still early days, but both for consumer goods and the manufacturing that surrounds agriculture, there’s a lot going on. There’s not yet much going on for exports to the rest of the world, although there are signs of export growth within Africa — a lot of products produced locally are relatively more competitive within Africa because of logistics costs.

The leader in terms of where manufacturing investment is coming from is agribusiness and agricultural processing, because of the growth in consumption of processed foods in Africa. The money in agribusiness is such that conglomerates are developing, which are somewhat similar to the conglomerates that we saw in the development of Southeast Asia coming out of agriculture — like CP Group in Thailand, which was a seed business originally, or Salim Group in Indonesia, which dominated noodles.

The Bakhresa Group in Tanzania, for example, is in about 10 countries now: as well as milling they do everything from petroleum products to real estate and they’ve even got a football club and a TV station. It would not look out of place in Southeast Asia.

Do African countries have an opportunity to take a larger market share of global manufacturing?

It’s possible. When you look at the most labor intensive activities, garmenting is the most obvious sector where labor costs are decisive. Factory labor in China now costs around $6-700 a month per employee; in Ethiopia or in Madagascar, where there’s a garmenting center that employs a couple of hundred thousand people, it’s $60-65 a month. If port-road connections and shipping can be put in place, and the country can remain politically stable, then this can certainly be attractive.

People say at the moment that China is trying to hang on to every last bit of manufacturing. That certainly wasn’t the case a few years ago when legislation was passed in China which reduced the number of products that could get VAT rebates and other incentives. But even if they are trying to hang on to more manufacturing now, at the end of the day, a tenfold difference in labor cost is significant.

The greater challenge probably for Africa is from other lower labor-cost locations in Southeast Asia and in India. That’s quite hard to predict. The Indians talk the talk about manufacturing, but they’ve never really done anything, which is largely why they have an economy less than a fifth the size of China’s, even though it’s now growing faster. In Southeast Asia, there is Cambodia or Indonesia, although I would say neither of those is without a bit of political risk. So the opportunity is there for African countries if they get organized.

 

As you were traveling around and researching this book, how much did you notice Chinese investment across the continent? And what sort of difference do you think it’s making?

You see Chinese people everywhere in Africa. The Chinese public banks have put about $150 billion dollars of lending into Africa and that’s made a huge difference. 80 percent of the money has gone into infrastructure. It’s generally been very positive, because as China has managed to do with almost everything, it’s delivered at a cost which is significantly below what African governments would have paid to European or U.S. firms. China has sliced the cost of many things that other developing countries need in half, for everything from the cost of concrete to the cost of hydro turbines.

Still, the results are inevitably varied because these are transactions between China and different types of African country. If the African countries are like Ethiopia, they say no, you’re not bringing Chinese workers here, you’re going to train our workers; and if governments negotiate as hard on price as the Ethiopians did, I think they can get a pretty good deal.

If, on the other hand, you’ve got politicians who are willing to take a bung and then let the Chinese do what they want to do, they’ll probably turn up with lots of workers because they find it easier to get the job done that way. Even when things are bad, though, I’m not sure that it’s always genuinely negative for the African country. If you look at Angola, which is the biggest borrower from China, they managed to pay $6 billion for an airport. But at the same time they also got a significant buildout of their electricity infrastructure, road networks and so forth. Angola is such a failed state, they were not going to get that done themselves.

The bigger picture is the amount of credit that China made available to Africa was beyond anything they were going to get from the U.S. and Europe; and the cost at which most projects were delivered was at a significant discount to what they would have paid for U.S. and European involvement.

I do think there’s going to be increased tension between the African Union and China just because of the scale of the Chinese trade surplus. But this is the same as the tension that China’s getting with everyone in the world. You can’t run an aggregate trillion dollar goods trade surplus and have people be happy with you.

 

What about the various accusations made against China, such as the idea that it is creating debt traps for African countries to increase its leverage over them? How fair is such criticism?

In some cases the Chinese banks have over lent, there’s no doubt about it; and so countries are saddled with more debt than it would be prudent for the Chinese banks to have given. We also know that for instance in a country like Angola, there are unpublished contracts that we believe require Angola to turn over more oil as the oil price goes down — not the kind of contracts that, say, the World Bank would recommend as a good idea. The Angolans will sign those sorts of contracts; the Ethiopians wouldn’t have done. Part of being a country is to be sufficiently grown up to be able to deal with other countries.

There’s no way that Africa is going to cease to be very involved with China, just as in the 1980s, Southeast Asia played the role of a vent for Japan’s manufacturing surplus, and the Middle East did so for South Korea. Africa today is the primary location playing that role for China. Estimates also say that around 12 percent of manufacturing in Africa is currently Chinese-owned. They’re there for a range of different commercial activities, and not about to leave.

And in general, did you find people at the policy maker level were more comfortable dealing with Chinese than their Western counterparts?

People in what I would say are the more competent governments who I talked to about China were mainly thinking about the cost and what they’re getting. But I’m sure it’s a relief to them not to have to deal with all the stuff that they would have to deal with in getting European investment.

What’s a little unclear now is the availability of credit from China for infrastructure projects… The question is whether China’s ambitions in Africa are going to pick up again once the central government is happy that existing debts have been managed such that what has to be written off is written off, and what can be recovered can be recovered.

I don’t see an alliance between African countries and China. I think the relationship is economic and transactional. People I’ve spoken to do see Chinese politicians as quite well informed about Africa, and they obviously like that. Certainly Africa is taken seriously and Chinese ambassadors in African countries tend to be very active.

What’s a little unclear now is the availability of credit from China for infrastructure projects, and whether that’s going to end or whether we’re in more of a pause. The question is whether China’s ambitions in Africa are going to pick up again once the central government is happy that existing debts have been managed such that what has to be written off is written off, and what can be recovered can be recovered.

What about the political aspect to the Sino-African relationship? Do you think African countries look at a country like China and see it as a desirable model, and that a certain level of autocracy is necessary to implement the economic development that the country needs?

The debate about whether a bit of autocracy is a good thing for development is very particular in Africa, because of the ethnic fragmentation of countries, which again goes back to demographics. When there was such a low population density for such a long time, different ethnic groups could coexist without much conflict. If there was conflict, people could always take off and find a new place to live. That is the opposite of European or Asian history: in a more densely populated Europe or Asia, everybody fought each other for land and then the victors imposed their values on the losers.

In Africa, traditionally, you didn’t have that. What they have ended up with is several thousand ethnic groups in what generally are colonially created states. What has become apparent since independence is that many of these countries actually need to have democracy to take the heat out of the ethnic conflicts that arose. That is very different to the post-independence situation in Asia.

In East Asia, it was easier to effectively say ‘we’re going to do autocracy for 30 years while we get the economy built’ because these were monoethnic societies. The minorities in Japan or Korea or China were never more than 5 percent of the population. African states are having to develop in a very different context. Mauritius, for example, had a lot of ethnic friction around the time of independence. They’ve done remarkably well with genuine democracy, and so has Botswana. I argue in the book that what is different in Africa from East Asia is that you do tend to need a cross-ethnic coalition politically, and that’s a challenge.

Let’s turn to China’s economy for one last question. Are you more in the optimist or pessimist camp at the moment?

There’s a case for both. What China has created in terms of its manufacturing capability, controlling a third of the world’s manufacturing output, gives it a very powerful position and it’s begun to be genuinely innovative in a number of areas.

But at the same time they have got to the point that we always knew that they would get to with the real estate sector. Once the population stopped urbanizing, given the way that construction was handled in China with property built out ahead of the arrival of demand, that was always going to create a big overhang. We’ve had such periods in the property market before. This time, the difference is that there just aren’t the people to come into towns to take the property up.

But the economy is still growing 5 percent a year. When you’re at over $10,000 of GDP per capita, that’s a very significant growth rate. Most of China’s challenges are political ones, particularly in terms of its relationships with the rest of the world. And although it’s now quite a powerful country, I don’t think it’s wise for China to get into a situation of economic conflict with the U.S. and the EU, and potentially other parts of the world as well. Hubris is the biggest risk for successful states.

 

Andrew Peaple is a UK-based editor at The Wire. Previously, Andrew was a reporter and editor at The Wall Street Journal, including stints in Beijing from 2007 to 2010 and in Hong Kong from 2015 to 2019. Among other roles, Andrew was Asia editor for the Heard on the Street column, and the Asia markets editor. @andypeaps

 

 

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Financial Times podcast

May 24, 2026

Here is the link to an FT podcast about How Africa Works.

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Kevin Coldiron’s Top Traders Unplugged podcast

May 13, 2026

You can access this popular US podcast here. I’m thinking to sue over the image they created of me but it is a good conversation.

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Africa Urban Lab podcast

April 16, 2026

A nice podcast with AUL that also features video for the masochistically-minded.

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Charter Cities Podcast

April 16, 2026

The sound quality of this podcast with the US-based Charter Cities Institute seems particularly good.

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Cape Radio on How Africa Works

April 2, 2026

Here is a link to a 2 April chat on South Africa’s Cape Radio about How Asia Works.

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Why Africa’s growth prospects may be looking up

March 4, 2026

By Reuters

This transcript [of Reuters Big View podcast] was created using speech recognition software, it may contain errors. Please review the episode audio before quoting from this transcript.
Peter Thal Larsen
What is the future for Africa’s economic development? Over the years, periods of high hopes for the continent’s prospects have swung to disappointment and back to hope again. Right now, it’s fair to say the mood has turned a bit gloomy again. Many African countries have been whacked by Donald Trump’s tariffs, which have upset their export markets. The United States, United Kingdom, and others have slashed aid budgets, and climate change is adding to the challenges facing many fragile African nations on top of the historic burdens of colonialism, slavery and the scourges of debt, disease and armed conflict which have blighted it in the past.
Peter Thal Larsen
The true picture is much more complicated than this. And there is a more positive story to tell, one where a handful of African countries have, with careful planning and thoughtful policies, transformed their economic prospects and where a population boom is creating the potential for future development and growth that have eluded most African nations in the past.
Peter Thal Larsen
So today on The Big View, we’re going to talk about African growth, the past, and more importantly, the future. It’s what we do at Reuters Breakingviews. We tap our best sources around the world for fresh insights into the biggest stories in business, finance, and economics. I’m your host, Peter Thal Larsen.
Peter Thal Larsen
Some people argue that it’s pointless to try and generalize about a continent which is home to 1.5 billion people spread across more than 50 nations spanning different history, geography, culture, and language. Others maintain that the conditions facing African countries are so historically and geographically unique that it is a mistake to try to compare their economic development to the experience of countries in Asia and South America. It’s fair to say my guest today disagrees. Joe Studwell is a journalist and academic who is currently a visiting senior fellow at the Overseas Development Institute. He’s spent much of his career living in and writing about Asia. But for the last five or six years, he’s been involved in an intensive and in-depth study of Africa. He’s written up his findings in a fascinating new book. It’s called “How Africa Works: Success and Failure on the World’s Last Developmental Frontier”.
Peter Thal Larsen
Joe Studwell, welcome to The Big View.
Joe Studwell
Hello Peter.
Peter Thal Larsen
So let’s start with perhaps the obvious question. I mean, you spent a big part of your career living in and writing about Asia. Your last book, admittedly some time ago, was called “How Asia Works”. You say in the introduction to this book, the project began by a mistake. What happened?
Joe Studwell
Well, there were two mistakes, really. One mistake was the Ethiopian and the Rwandan governments asking me to go and see them. And I said, well, I don’t know anything about Africa, so that would be pointless, even if it’s lovely of you to ask me. And they said, no, no, you don’t need to know anything about Africa. We want to talk to you about Asian development policy. And then the other one was a meeting with Bill Gates, who liked the last book. And with Gates I talked for an hour about Asia. But at the end of it, he said, “oh, you know, but what I’d really like to know is what you think about Africa”. And it was these events that got me thinking, you know, that perhaps there was something to be done. I knew it was going to be a huge project because there are 55 countries in Africa and it was going to take a lot of time. But Gates, the Gates Foundation, and Omidyar, which is one of the eBay founders, together said they were willing to fund the research. And that’s how it started and kicked off.
Peter Thal Larsen
And so you, you spent something like seven years, is that right?
Joe Studwell
I don’t think it was as much as seven years. It was five, six years in total. I wasn’t doing it the whole time, but I was doing it a lot of the time. You can imagine with stuff that you’ve covered in your career that you’ve got to get the historical backstory of different countries. You’ve got to recognize that there are different drivers of economic development in different places. It takes a long time, but I found it fabulous. I didn’t have a bad experience in Africa actually, and I met some really interesting, straightforward, get-ahead people. I thoroughly enjoyed doing the work.
Peter Thal Larsen
Because there is, I mean, there’s another potential challenge facing a book like this, which is how can you possibly generalize? As you say, there is more than 50 countries, different sizes, geographies, languages, political structures, colonial histories. So what made you confident that there was something that could be said that would be sort of relevant on a continent-wide scale?
Joe Studwell
I wasn’t confident — but I got into it and I thought, if there are themes, I’m going to find out what those themes are. And yeah, in the middle of the project, I thought I’m never going to find anything, any commonalities here, it’s just 55 different countries. But ultimately, as I pulled together more and more research, I began to see that no, and there is a pattern in Africa. And it’s a pattern that surrounds demographics, which was not something that I’d ever paid — it wasn’t that I hadn’t paid attention to it in Asia, but I hadn’t ever needed to be concerned because East Asia and South Asia always had sufficient demographic density for economic development, at least after the Second World War. You’d have to go back into the 19th century to find parts of East Asia, Southeast Asia, particularly, that were sort of problematic in terms of demographic density. But when I looked at Africa, what I realized was that that was the major constraint on the continent. We think about Africa today, people, I suppose, particularly in Europe and the US, are starting to get frightened by the population numbers that they’re beginning to get familiar with. So at the end of the Second World War, there were only 230 million people in Africa. Today, there’s 1.5 billion. In 2050, there will be 2.5 billion. At the end the century, there’ll be 4 billion people in Africa. So, you know, the standard reaction to this is the, is the Malthusian one that, oh my God, we’re going to sort of breed ourselves to extinction. But the developmental story, the real developmental story in Africa, is a different one. And it is that in 1960, at the time of independence, when some people were quite optimistic about African development, population density per square kilometer was under 10 people, fewer than 10 people per square kilometer. It’s not a lot. It’s about the same as historians reckon there were in Europe in 1500. And in 1500 in Europe, how much growth was there? Well, there wasn’t any growth. And the reason was there were not enough people. Today, we’re just getting in Africa to the population density that we had in Asia in 1960. The end of this decade we’ll be there. So even though it’s a couple of billion people at the end of this decade, in density terms, it’s only getting to where Asia was in 1960. And that is hugely important because without a minimum amount of demographic density, it’s really impossible to develop because you don’t have markets. You can’t afford infrastructure because when you work out the cost of infrastructure on a per capita basis, it’s just too expensive to build a road or a reservoir or whatever, per person. You don’t get the division of labor that you get with more people and you don’t get a bunch of other what economists call economies of agglomeration. So when all that stuff is missing, you’re really stuck. And that has been — and the core argument of the book is that has been — the biggest constraint on Africa to date, you know, the literature has tended to tell us that it’s been problems of governance, problems of corruption, kleptocracy, problems of ethnic conflict, problems of other civil strife. But those to my mind of mainly been proximate problems. The fundamental problem is that Africa hasn’t had enough people.
Peter Thal Larsen
That’s really fascinating. And I think, I mean, you even sort of, you make the point that, that this goes right back to even the sort of the pre-colonial period, and the colonial period, that actually the way in which the, the colonial countries administered their African colonies was with relatively little investment or kind of oversight?
Joe Studwell
Yeah, I mean, we tend to look back at colonialism in Africa and focus on the fact that it was quite brutal, but it’s more useful in understanding what happened in the colonial era to understand the finances of it. And the dearth of population meant that colonial governments couldn’t raise tax or they couldn’t raise sufficient tax to do anything very much apart from put very small numbers of people, of foreigners, of Europeans, in place, and then rule rural areas in Africa through either chiefs who existed already or chiefs who were put in place by the colonial powers. I mean, there’s research that’s looked at the colonial numbers were put in place in terms of expatriates that were put into place in British colonies in Africa. And each person, each colonial officer, which was usually a district officer, was looking after an area the size of Wales, which would be the size New Jersey in the United States. And so you can imagine. With a horse. You’re not going to get a lot done.
Peter Thal Larsen
Right — I suppose that’s probably right. So it’s clear, as you say, the demographic picture is changing very quickly now. Now you sort of present this as clearly as an opportunity in terms of this enables certain things. But it also, people also think about it as a risk. I mean, there’s a sort of Malthusian argument, but there’s also a sort of, I think the World Bank and others make this argument that you have lots of people who are reaching sort of working age in Africa and just, there are insufficient jobs to support them then — then what happens? I just wonder how you think about the balance of opportunities and risks?
Joe Studwell
I think obviously there are huge risks, but the point I make in the book is that you’ve got to have these people in order to be in the developmental game. Because if you don’t have sufficient density of people, at least, as I say, what we had in Asia in 1960, you’re not going to — you’re not going to get your economies moving. I came away from it preferring to feel optimistic, but I think you can look at the situation and be very pessimistic if that’s the kind of person that you are. I feel somewhat optimistic because the bit of the economy of Africa that you would expect to respond first to greater demographic density, which is agriculture, as was the case in Asia, is responding. So since 2000, we’ve had average agricultural growth, value added growth per year in Africa of about four and a half percent, all right. So that’s the fastest rate in the world. You wouldn’t expect most places in Asia to be faster now because they’re relatively mature in terms of their agriculture sectors. But nonetheless, it’s pretty impressive. And, you know, you can look around the continent, look at, you know, look at Nigeria, as one often has to because it’s the most populous country in Africa. Frequently described as chaotic, ungovernable. But since 2000, the data show that agriculture has been growing at nearly 6% a year, right? So that’s pretty impressive for a chaotic ungovernable country.
Peter Thal Larsen
You talked about how Ethiopia and Rwanda were interested in you talking to them about the Asian development, and you write quite a lot — Ethiopia and Rwanda are two of the examples that you explore in terms of where there’s been some lessons to be learned in part. I’m just wondering a bit about that comparison with Asia. Because what strikes me about the Asian development story, and what I took from your last book, “How Asia Works”, was really that they did things that were against the sort of the economic orthodoxy of the time, right? So that the countries that successfully developed in Asia, Japan, South Korea, Taiwan, you know, they had tariffs, they had capital controls, you know, kind of, they didn’t open up their markets in the way that sort of that the consensus, the economic consensus would have suggested. What you’ve got here — but they didn’t really have, there wasn’t a template to follow. They were just sort of, they were just doing things differently. Whereas here it seems like there’s a more conscious effort to try and say, well, it worked in Asia, maybe it can work for us too. Is that fair?
Joe Studwell
I mean, that’s fair for Rwanda and Ethiopia, which have very, very definitely been trying to replicate Asian models. I mean Rwanda, very interesting, very focused on the Singaporean model, which sounds ridiculous, right? Because Singapore’s this little island on the main shipping lanes of Asia, and Rwanda is bang in the center of Africa. But actually, when you, when the Rwandans explain to you their logic, it does make some sense. Because they say, well, we are so remote and the cost of moving things here by truck is a multiple of what shipping from Asia or wherever costs, we can actually use our isolation to produce manufactured goods that wouldn’t be competitive in the world economy, but are competitive in the center of Africa. So them and the Ethiopians where, yeah, there’s just been a phenomenal appetite to absorb the lessons of development elsewhere, and people are fantastically well-read. Every other minister seems to have done a PhD on the side while being a minister, and the PhDs are all kind of looking at developmental problems. So they are like that. And other countries I would say are sort of less aggressively thinking that they’re going to replicate what’s happened in East Asia. But in a country like Nigeria, you’ll meet politicians like the current vice president who are very interested in learning lessons from East Asia, and then other countries, again, you don’t get a lot of direction to the sort of developmental thinking. But that isn’t quite the end of the world because what we see in Africa, and this is quite different to Asia where most development was state-led in some way or state-orchestrated in some way. What we see Africa and other African countries where there isn’t strong political leadership is we see the private sector leading. And most obviously at the moment, because of the growth, 25 years of accelerated growth in agriculture now, so we see private sector really being very active in the manufacturing bit of agriculture, which is basically making processed foods, everything from milling grain to actually producing packaged foods. And already we see a pattern where quite big companies are coming into being, working across eight, nine, ten countries, producing enough cash flow then to go into other businesses. So in Tanzania, one firm I talk about a little bit is Bakhresa. It’s the biggest agribusiness in Tanzania. It started in milling, bought mills in different countries when they were privatized by African governments. And now they’re in everything from petroleum products to real estate to a TV station, and I think they’ve got a football club as well. You know, so, and quite similar, I mean, Peter, I’m sure you’ll see the analogy or the comparison here, quite similar to those kind of Christmas tree businesses that grew up in Southeast Asia. So you think of CP Group in Thailand or the Salim Group in Indonesia or Astra in Indonesia —
Peter Thal Larsen
Big conglomerates doing lots of different things —
Joe Studwell
Yeah, but they all come out of agriculture. They all originally come out of agriculture, and then the cash is there, and they go and pursue a bunch of different opportunities.
Peter Thal Larsen
So this may be a good segue. I mean, you’ve talked about agriculture as being one of the key, the key sort of things to solve or is in the process of being solved perhaps. There’s manufacturing and obviously manufacturing was a huge part of the Asian development, for the successful Asian development. I guess the counterargument would be today that manufacturing has changed. Everybody’s adopting robotics and artificial intelligence. It’s a little bit the way people talk about India as well, is that the opportunity to do in Africa what was done in South Korea and Taiwan and other places that that moment has gone. How do you think about that argument?
Joe Studwell
I don’t think so. I mean, I think that technologically manufacturing is changing, but very slowly. But I think when you get very large, very low-cost labor supplies, that people remain very competitive against robots and AI. Manufacturing wage rates in Africa now are like $65 to $90 a month, compared to $600 or $700 in China. And then if you compare that with robots, if you look at garmenting, the sort of absolute lowest value added area of activity that countries first go into, a garmenting robot usually can’t do a huge amount of stuff because material, of its nature, is flexible. And robots like working with solid things. But I mean, it’s not going to cost you less than $100,000. And the problem with robots and putting robots into factories is you pay upfront the full amount. You know, you compare that with bringing labor in and laying labor off, which, in poor countries, you can always hire and fire labor as you want it. So a lot of manufacturers, that’s a lot more attractive at $65 a month than potentially overcapitalizing a manufacturing line. So I just don’t think that we are at the point where if you’ve got sufficiently affordable and reliable labor and political stability, that manufacturers are going to say, no, no, we’d rather work just with robotics. I think the more serious challenge to Africa’s ambitions in manufacturing is the competition that there will be from Southeast Asian states that still have a lot of low-cost labor, so Indonesia and South Asia. So is India going to bring a very large number of people into manufacturing? And if they do that with really good government support, then that I think can be more problematic for Africa. But still, at the end of the day, one thing that Africa has very much on its side is the logistics relationship with Europe. I mean, North Africa, totally so, right? I mean, Morocco, you’re 14 kilometers from Spain.
Peter Thal Larsen
You mentioned two important words there, political stability. Obviously, it’s very easy to say that there has been a history of particularly civil war in Africa. But also, I think one of the things that’s striking to me from reading your book is that actually, even against that backdrop, some countries have managed to do very well. You talk about Ethiopia, which obviously had the terrible famine that we all remember from the 1980s and then a period of growth, but also a really gruesome civil war in the 2020s. And yet the economy has continued to grow. And Rwanda came out of this terrible genocide and has had a lot of political upheaval and still managed to keep growing. I wonder how you rationalize that. From the outside, you would look at that and say those two things are inconsistent?
Joe Studwell
Yeah. I mean, again, I think one can look at Africa today and be an optimist or a pessimist in terms of conflict that you see going on around the continent. To me, the main concentration of conflict and coups that we’ve seen in recent years has been the Sahel region, where you have a very particular story. It’s a very particular environment. It is very impacted by climate change, and so forth. And I don’t, so I don’t think that that is symptomatic of a political malaise more generally. But, you know, do you see conflict in other places? Yes, you do. I mean, we can’t deny that. And, you know, the ethnic diversity of the continent is at the root of this. And again, it goes back to demographics. I mean, historically, thousands of different ethnicities could survive in Africa because population was so low. And there was actually very little by European standards, very little conflict between different groups. And if you got in a disagreement and an argument, you could move off and find new land to inhabit. So ethnic strife is going to continue to be a problem. Ethnic conflict is going to continue to be a problem. I think though that one positive that I would point to, maybe not normally one that’s pointed to, is that if you look at protest in Africa over the last, say, five years, and you look at protests that we’ve all seen on the TV in Kenya, in DRC, in Mozambique, in Ethiopia. What’s quite striking to me, is that you see more and more evidence of protests being cross-ethnic. You see different ethnic groups. So it’s no longer about I’m this and you’re that. It’s about the issue. And I would actually point to that as potentially the front end of a positive trend in in Africa. But, you know, that said, unrest will continue to be a problem. We’ve just got to keep it in a bit of perspective. I mean, if you look at the number of people who’ve been killed in incidents in wars or domestic unrest with more than a thousand casualties since 1960, it’s reckoned to be around 6 million. Six million is the top end of the estimates of the number of people who died in Europe in the Napoleonic Wars, which were like a dozen years. So you’ve got to have a bit of perspective on this. It’s kind of too easy for us to look at Africa and say, oh, they’re violent people. I mean, anybody who knows the history of Europe would say we are extremely violent people.
Peter Thal Larsen
Yes, no, absolutely. Yeah. Well, and, you know, not that we, not that you want to get into a numbers game, but when you start looking at, you know, people who died in China during various great leaps forward and things like that, famines. One thing I’m just curious about, because I think there’s two things that probably feature less in your book than in most of the discussion about Africa that you hear or read at the moment, which was basically debt and China. There is this issue with a number of countries that are very heavily indebted, and trying to get out of their debt, complicated by the fact that they’ve also borrowed heavily from China. There was this whole argument that China’s sort of somehow trapped these countries into a sort of, into a debt dependency. I just wonder, I mean, obviously, again, it’s quite hard to generalize from country to country, but how do you think about that issue when it comes to Africa?
Joe Studwell
I mean, the first thing I think about is that African lending, to infrastructure projects and power projects in Africa, has brought capacity and resources that just would not be there otherwise. So if you add up what principally the Chinese policy banks have lent, but at other banks as well, it’s about $150 billion, okay. And that money was not going to come from anywhere else. So I would say that that’s been actually very important to African development, and Africa getting some basic infrastructure resources in place to begin to take advantage of its demographic growth. That said, has China overlent to some countries? And has it been opaque, in the extreme, in the agreement surrounding that lending? Yes, I think that’s certainly true. I mean, for instance, Angola, which is the biggest China debtor, we just don’t know. There’s a lot of speculation, but we just really don’t really know what exactly is in those loan agreements —
Peter Thal Larsen
Which is part of the problem —
Joe Studwell
Yeah, which is part of the problem. But I don’t see this as a Chinese conspiracy. I think that they really did, you know how they do everything as a campaign. I think they really did think that they were taking over the world and they were going to lend all this money to Africa and it was all going to get paid back. And they made some very poor decisions along the way. That has to be cleaned up. I mean, what I’d say from an African national perspective on this is that the number of countries in genuine debt distress is a small subset of all those in Africa. And one way or another, as with all debts, it’s going to have to be resolved.
Peter Thal Larsen
But you don’t see that as a — as a sort of a lasting impediment to development?
Joe Studwell
No, I don’t think so because I think most Chinese lending in Africa has paid for infrastructure and utilities that were needed. And in general, China has delivered those construction projects at a big discount in cost terms to what it would have cost to get the work done by European or US firms. And that’s what we tend to to forget, right? I mean, as with everything, China has cut half, or more, off the cost of doing infrastructure projects.
Peter Thal Larsen
We’re running out of time. I just sort of, just wanted to end on a, you know, as you said, you were sort of your — you chose to be an optimist about this. I thought there was, there’s an interesting sort of line at the end of the book where you say, “If you live outside Africa, whether in the Americas, Europe or Asia, Africa is going to be a bigger part of your life in trade, investment, tourism, literature, and music.” You sort of compare it almost to the impact that Asia was beginning to have in the 1960s and has had since then, which is quite an intriguing prospect. I mean, sort of, yeah, how would you sort of — how would you advise people to prepare for that?
Joe Studwell
I mean, there’s lots of interesting places to go and visit in Africa. People of our generation, if you want to see the deserted beaches that you saw in India or Southeast Asia in the 1980s, then you really need to go to Mozambique or Togo or another African country, because those are the only places that you’re going to see that. Yeah, it’s the last — it is the last frontier in that, in that respect. And, you know, it is also kind of a nice place to go if you’re coming from Europe, because there’s no jet lag, right? It’s all pretty much the same time zone.
Peter Thal Larsen
I see. Well, you’re doing — you’ve got a bright future as part of the African Tourist Board or something like that, if all else fails. But I won’t ask you which continent you’re going to write about next, but we can leave that for another time. But this was really fascinating, Joe. Thank you so much for taking the time.
Joe Studwell
Thank you for having me.
Peter Thal Larsen
That’s all we have time for this week. Thanks to Joe for that fascinating discussion. And as always, thanks to you for tuning in. This podcast was produced by Oliver Taslic, with the help of Mike Coupland and Jon Hodge in the studio in London. You can check out a new episode of The Big View every Tuesday. Don’t forget to tune into our sister show, Viewsroom, every Thursday, and all the other great podcasts from the Reuters team. To get in touch with feedback, questions and ideas, please email us on [email protected]. That’s [email protected]. If you like what you heard, please rate the show and leave us a review. And check out our views on the biggest stories in business and finance every day at Breakingviews.com and Reuters.com.

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The Big View podcast and Tyler Cowen’s podcast.

March 3, 2026

Here is a link to a Reuters Big View podcast about How Africa Works. You can also find it on Spotify and Youtube. And here is a link to Tyler Cowen’s podcast about How Africa Works.

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Key themes in How Africa Works

February 16, 2026

Below are links to two articles I wrote for Dragonomics about key themes in How Africa Works. If you want a bit more detail about what is in the book before shelling out your hard-earned, you will find it in these pieces.

How-Africa-Works-1-Africa_Becomes_A_Little_More_Asian.pdf

How Africa Works 2 The_Birth_Of_African_Demand

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