# The Nigerian Industrial Behemoth That Could Reshape the African Economy

An episode of [Odd Lots](https://invisiblenetwork.ai/podcast/1056200096), 24 Aug 2026, 58 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/8a94442e-5a74-4fa2-8b8d-ae27003a8d6b/568c6e3c-2159-45c2-8e4d-b4ad011d7c22/audio.mp3?utm_source=Podcast&in_playlist=982f5071-765c-403d-969d-ae27003a8d83

Earlier in August, it was reported that Nigeria's Dangote Refinery secured a $1 billion underwriting for its upcoming stock market listing, which is set to become Africa's largest IPO. Indeed, the whole the continent has seen lots of economic growth in the last few years: According to the United Nations, growth across Africa was expected to reach 4.0% in 2026. The history of economic development on the continent is a vexed one; access to critical resources, whether its minerals or petrochemicals, has not always equated to improved economic conditions. To understand what is going on in Africa, we talk to Joe Studwell, the author of How Africa Works: Success and Failure on the World's Last Developmental Frontier. The product of a decade of reporting, Studwell's book argues that African countries, in many instances, have failed to adopt development strategies (an industrial policy that favors export manufacturing for instance) that mirror Asian counterparts. And while development has been uneven, Studwell is optimistic that the seeds of sustained development are increasingly taking root, at least in some countries. We speak to Studwell about the Dangote IPO, why development has historically been so difficult, Rwanda's dreams of becoming Africa's Singapore, and why Lagos is one of the most impressive cities in the world. Read more: Dangote Offers East Africa Nations 30% Stake in New Refinery T. Rowe Price Says Nigeria Attractive Even After 64% Stock Rally Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots Subscribe to the Odd Lots Newsletter Join the conversation: discord.gg/oddlots See omnystudio.com/listener for privacy information.

## Transcript

[0:03] Speaker 1: Hello, Odd Lads listeners. I'm Joe Wisenthal and.
[0:06] Speaker 2: I'm Tracy Alloway.
[0:07] Speaker 1: We're the hosts of the Odd Lads podcast, and we've
[0:10] Speaker 1: got something exciting for.
[0:11] Speaker 2: You, that's right. So one of the best parts of
[0:13] Speaker 2: hosting our podcast is we get to actually meet and
[0:16] Speaker 2: interact with our listeners. And we know we have some
[0:19] Speaker 2: listeners over in Los Angeles.
[0:21] Speaker 1: That's right. So if you're in LA, we are going
[0:23] Speaker 1: to be recording a live show, some live recordings at
[0:27] Speaker 1: the Vermont Theater in Hollywood on September seventeenth.
[0:30] Speaker 2: We have some really exciting guests lined up, have some
[0:33] Speaker 2: really great conversations planned, so go ahead and get your tickets.
[0:36] Speaker 2: You can find those over at bloomberg dot com forward
[0:39] Speaker 2: slash odd Lots, or click the link below in the
[0:41] Speaker 2: show notes and come and say hi when you're there.
[0:49] Speaker 3: Bloomberg Audio Studios, Podcasts, Radio News.
[1:04] Speaker 1: Hello and welcome to another episode of the Odd Lots podcast.
[1:08] Speaker 1: I'm Joe Wisenthal.
[1:10] Speaker 2: And I'm Tracy Alloway.
[1:12] Speaker 1: I don't know what it is, Tracy, I kind of
[1:14] Speaker 1: have this urge to do an Africa trip, Like I
[1:17] Speaker 1: sort of want to go to some of these capitals,
[1:19] Speaker 1: Lagos Opera, Kigilee and so forth. Like I don't know,
[1:23] Speaker 1: I'm like, I've never been there, and now I'm like,
[1:25] Speaker 1: I'm kind of curious.
[1:26] Speaker 2: Well, you know, the urge to explore Africa is well
[1:29] Speaker 2: documented among the history of men, of white men in particular, Joe.
[1:34] Speaker 2: So really you're just following your instinct here, I guess. Yeah.
[1:39] Speaker 4: I've been to.
[1:39] Speaker 2: Africa various places, Morocco, Egypt, Tanzania, Mozambique, South Africa. Briefly.
[1:47] Speaker 2: I have some insane stories I could tell you, but
[1:50] Speaker 2: probably the one thing that stands out to me is
[1:53] Speaker 2: the diversity of that particular continent. Obviously, so Egypt is
[1:58] Speaker 2: very very different to a play totally like Mozambique. And
[2:02] Speaker 2: I will say, you know, like I saw some a
[2:05] Speaker 2: lot of development in places like South Africa, Egypt to
[2:08] Speaker 2: some extent. Mozambique was one of the poorest places I've
[2:11] Speaker 2: ever seen in my life, to the point where a
[2:14] Speaker 2: lot of people don't even want money, they would just
[2:16] Speaker 2: barter for goods like an extra T shirt in your
[2:18] Speaker 2: luggage or something like that.
[2:20] Speaker 1: It is pretty extraordinary just generally, you know, I think
[2:25] Speaker 1: there was if you had gone back fifty years ago
[2:27] Speaker 1: or something, like that you would have had this view
[2:30] Speaker 1: that you know, countries around the world over time converge economically,
[2:35] Speaker 1: particularly in a world of free trade. The factories chase
[2:39] Speaker 1: the countries that have the cheapest labor, et cetera, and
[2:43] Speaker 1: therefore everyone in a world of free trade you get
[2:46] Speaker 1: this sort of like broad growth and wealth. But the
[2:48] Speaker 1: extremes you know of outcomes over the last several decades
[2:52] Speaker 1: has been truly extraordinary.
[2:54] Speaker 2: Absolutely. So you have places like Nigeria, like Legos I
[2:58] Speaker 2: think you mentioned, which seems to some extent be booming
[3:01] Speaker 2: at the moment with higher oil prices. You have a
[3:04] Speaker 2: very very big IPO coming down the line.
[3:07] Speaker 1: Yeah, so this is what I'm particularly interested in. We
[3:11] Speaker 1: had a I met a listener a predetor w MA
[3:15] Speaker 1: A docs when we were in London a couple of
[3:18] Speaker 1: years ago, and he's like, oh, you guys really have
[3:20] Speaker 1: to do an episode on this new oil refinery that's
[3:24] Speaker 1: that's being built in that you're anyway, this is for him.
[3:28] Speaker 1: I hope he's listening.
[3:29] Speaker 2: At this point because it took two years, but we're
[3:31] Speaker 2: doing it.
[3:31] Speaker 1: Doing it because there's the news today that dan Gote
[3:35] Speaker 1: refinery or sorry, the news this week we were recording
[3:39] Speaker 1: this August twentieth, came out earlier in the week that
[3:42] Speaker 1: they had secured four hundred million dollars ahead of planned IPO,
[3:46] Speaker 1: that there's a one billion and backing from a few
[3:49] Speaker 1: other firms, and also that the founder of this company
[3:53] Speaker 1: he's also I believe you know, he's one of the
[3:55] Speaker 1: richest people in the world. And I don't think Dangote
[3:58] Speaker 1: is anywhere close to being a household name.
[4:00] Speaker 2: No, and it's going to be the biggest stock market
[4:03] Speaker 2: listing in African history ever. So we should definitely talk
[4:06] Speaker 2: about it, and I think it's good to talk about
[4:07] Speaker 2: it in the context of why development in Africa has
[4:11] Speaker 2: or hasn't happened in certain cases.
[4:13] Speaker 1: Absolutely well, I'm very excited to say we really do
[4:16] Speaker 1: have the perfect guest, someone we've never talked to on
[4:18] Speaker 1: the podcast before, but it was probably an error because
[4:21] Speaker 1: someone who's out writing and thinking has been very influential
[4:25] Speaker 1: to people of our cohort over the last several years
[4:28] Speaker 1: who are interested in things like industrial policy and so forth.
[4:31] Speaker 1: We are going to be speaking with Joe Studwell, Senior
[4:34] Speaker 1: Fellow at the Africa Urban Lab, Senior Visiting Fellow at
[4:38] Speaker 1: ODI Global and the author of the recent book How
[4:41] Speaker 1: Africa Works, and of course many readers may have read
[4:44] Speaker 1: his previous book How Asia Works, talking about how some
[4:48] Speaker 1: of these East Asian economies got as wealthy as they did. So, Joe,
[4:53] Speaker 1: thank you so much for coming on od loines.
[4:56] Speaker 4: Well, thank you for having me.
[4:58] Speaker 1: Let's start with the simple question what is this company
[5:01] Speaker 1: Dingote and who is the founder?
[5:05] Speaker 4: So? Aliko Dangote is from Krno in the north of Nigeria.
[5:10] Speaker 4: He's a Muslim trader, archetypal Muslim trader. He grew up
[5:17] Speaker 4: trading soft commodities, got a substantial business doing that, and
[5:21] Speaker 4: then he went under the presidency of Obasanjou to the
[5:27] Speaker 4: government and negotiated a deal where he'd get four years
[5:30] Speaker 4: of protection as a monopoly importer of cement which was
[5:34] Speaker 4: not then made in Nigeria in return for creating local
[5:39] Speaker 4: cement production. And he did that. But not only did
[5:42] Speaker 4: he do that, he went on to do it across Africa.
[5:46] Speaker 4: He's in a dozen countries doing cement now and he's
[5:49] Speaker 4: beaten in most places the multinational cement producers like the Swiss,
[5:56] Speaker 4: wholesim and whatever who did pupre. He dominated the business
[6:01] Speaker 4: so that was the first thing that he did that
[6:03] Speaker 4: people really kind of sat up and said, Wow, this
[6:06] Speaker 4: guy has got something. And then he decided he'd do
[6:11] Speaker 4: something much bigger, and he decided he would build an
[6:16] Speaker 4: oil refinery in a country where a couple of times
[6:19] Speaker 4: previously government had tried to develop refining capacity and it
[6:23] Speaker 4: was just a disaster and industrial policy disaster. Dan Gotte
[6:29] Speaker 4: did it. He spent twenty billion dollars. It's east of Legofs,
[6:33] Speaker 4: a huge, huge plant, and it worked, it is working,
[6:38] Speaker 4: and not only that, he's expanding it now. So in
[6:42] Speaker 4: the course of doing that, he became the richest guy
[6:45] Speaker 4: in Africa. But he doesn't stop because he's developed such
[6:49] Speaker 4: capability in terms of project management and project delivery that
[6:53] Speaker 4: he just goes on to other things. So next to
[6:57] Speaker 4: his oil refinery is a very large urea plant, fertilizer
[7:02] Speaker 4: plant which is now supplying the majority of fertilizer consumed
[7:05] Speaker 4: in Nigeria. And he's recently signed up to do the
[7:11] Speaker 4: same thing in Ethiopia, the second most populous African country
[7:18] Speaker 4: after Nigeria. And yeah, he just keeps rolling forward. And
[7:24] Speaker 4: so this listing I think will be will be pretty
[7:28] Speaker 4: heavily oversubscribed because it's investor access to the first real
[7:34] Speaker 4: quality listed industrial asset pack on the continent.
[7:42] Speaker 2: I have a this is just a sort of tangential question,
[7:46] Speaker 2: but you mentioned that he was first in cement production.
[7:49] Speaker 2: Why does cement productions seem to be such a thing
[7:52] Speaker 2: in developing nations in particular, such that if you go
[7:56] Speaker 2: to a place like Nigeria or like Meanmar, you will
[7:59] Speaker 2: see a lot of ads for different cement brands and
[8:03] Speaker 2: it feels like everyone is producing cement.
[8:06] Speaker 4: Yeah, because it's so fundamental to development. I mean, development
[8:11] Speaker 4: is about investment, construction, creation of physical assets, and so
[8:15] Speaker 4: cement is just absolutely fundamental.
[8:19] Speaker 2: Okay, A serious question. Now then, so what does the
[8:23] Speaker 2: denk Gote example actually say about I guess the diversification
[8:30] Speaker 2: prospects for Africa because when I think, okay, it's a
[8:33] Speaker 2: petroleum refinery that you know, urea production that's kind of industrialized,
[8:38] Speaker 2: but it's also very connected to resources, right, and we've
[8:42] Speaker 2: all heard about the resource curse. We know that various
[8:45] Speaker 2: African nations have experienced it to some extent throughout time.
[8:50] Speaker 2: So how much of this is actually in an industrial
[8:53] Speaker 2: success story versus like kind of more of the same.
[8:58] Speaker 4: I would say it's different to what we saw in
[9:00] Speaker 4: the past in Africa. So Africa has a reputation for
[9:03] Speaker 4: having tons and tons of hydrocarbons and minerals resources. It's
[9:08] Speaker 4: not really true. Actually, we just perceive Africa that way
[9:12] Speaker 4: because in the past there wasn't much other economic activity,
[9:15] Speaker 4: so it seemed like minerals and hydrocarbons were dominant. But
[9:19] Speaker 4: if you compare it with somewhere like the United States
[9:23] Speaker 4: and you look at what African countries have gone, it's
[9:27] Speaker 4: nothing like the mineral and hydrocarbon resources as a share
[9:31] Speaker 4: of GDP. So I would say that it's different to
[9:36] Speaker 4: what we had in the past because you look at
[9:39] Speaker 4: all of Dangote's businesses and it's really a demand driven story.
[9:44] Speaker 4: And what I mean there is that the growth of
[9:48] Speaker 4: population and the growth of population density in Africa is
[9:52] Speaker 4: now creating markets, particularly urban markets, of a type that
[9:56] Speaker 4: we just didn't have before. And so you build your
[10:00] Speaker 4: cement plants and the demand for what you're producing is
[10:04] Speaker 4: just massively greater than it was in the past. The
[10:08] Speaker 4: same for refined oil products, the same for fertilizer. Africa
[10:12] Speaker 4: as a continent now has one point five billion people.
[10:16] Speaker 4: That's about the same population density as Asia in nineteen sixty.
[10:21] Speaker 4: So it's still not very densely populated, but it is
[10:24] Speaker 4: when you compare it with immediately after the Second World
[10:29] Speaker 4: War when Africa had two hundred and twenty million people.
[10:32] Speaker 4: So it's gone from twenty million to one point five billion.
[10:36] Speaker 4: And when after the Second World War Africa had two
[10:38] Speaker 4: hundred and twenty million people, that was the same population
[10:41] Speaker 4: density as Europe in fifteen hundred and that to me
[10:44] Speaker 4: is the fundamental reason why you didn't have a lot
[10:47] Speaker 4: of economic growth.
[10:48] Speaker 1: How does population density per se play an important role
[10:53] Speaker 1: in a country's capacity to industrialize?
[10:56] Speaker 4: Yeah, I mean for all the reasons that you would expect.
[10:59] Speaker 4: I've already talked about markets. You've got to have markets
[11:02] Speaker 4: for what you're going to produce. Particularly, urban markets are
[11:05] Speaker 4: very important. Urban markets are also important because cities produce
[11:09] Speaker 4: most of the tax that is paid in any country.
[11:14] Speaker 4: Then you've got to think about infrastructure. Every society requires
[11:17] Speaker 4: a lot of investment in infrastructure. The cost of infrastructure
[11:21] Speaker 4: is determined fundamentally on a per capita basis, or if
[11:24] Speaker 4: the affordability is determined on a per capita basis, until
[11:27] Speaker 4: you've got the people, you're not going to be able
[11:30] Speaker 4: to afford it. And then there are questions of division
[11:33] Speaker 4: of labor. When you get concentrated populations in cities, you
[11:37] Speaker 4: get much better division of labor, much greater specialization, and
[11:40] Speaker 4: in turn you get much greater creativity. So you know,
[11:45] Speaker 4: the famous statistic that's always rolled out is that eighty
[11:50] Speaker 4: percent of GDP around the world is created in cities,
[11:55] Speaker 4: even though they don't occupy that much physical space. In
[12:00] Speaker 4: the Africa book, I use the example of the UK,
[12:04] Speaker 4: where one city, London, generates seventy percent of the UK's
[12:09] Speaker 4: fiscal surplus. You have London and the Southeast region of
[12:12] Speaker 4: the UK are the only two parts of the UK
[12:14] Speaker 4: that produce a fiscal surplus. Seven other regions of the
[12:17] Speaker 4: UK are all in fiscal deficits and essentially as subsidized
[12:22] Speaker 4: by the most densely populated part of the country.
[12:42] Speaker 2: Are there limits to the population density thesis because I
[12:45] Speaker 2: take the point and again, if you think of Africa,
[12:48] Speaker 2: it is absolutely huge, and we can get into some
[12:51] Speaker 2: of the geographical limitations later on. Populations are relatively scattered.
[12:56] Speaker 2: But thinking back to the Nigeria example, I mean Nigeria
[13:00] Speaker 2: population like has been one of the denser populated areas
[13:05] Speaker 2: on the continent for a while, but it has actually
[13:08] Speaker 2: I think underperformed relative to a lot of other countries.
[13:11] Speaker 2: So what does that say about the importance of population density.
[13:15] Speaker 4: So you're right, Nigeria is about two hundred and fifty
[13:19] Speaker 4: people per square kilometer, which is significantly higher than the
[13:24] Speaker 4: African average today. I wouldn't say though, that it has
[13:28] Speaker 4: overall underperformed in the period since two thousand, when the
[13:31] Speaker 4: whole African economy has picked up. Nigerian agriculture, which is
[13:37] Speaker 4: the thing I would expect to show growth first as
[13:40] Speaker 4: population grows, because when poor people will just eat more,
[13:43] Speaker 4: I mean that's the first thing they do. They consume more, more,
[13:47] Speaker 4: more in the ware, foodstuffs. Nigerian agriculture since two thousand
[13:51] Speaker 4: has been growing close to six percent a year. That's
[13:55] Speaker 4: faster than anywhere that I'm aware of in Asia, faster
[13:58] Speaker 4: than someone like China. So things are moving. They're not
[14:02] Speaker 4: moving crazy fast, because Nigeria is a pretty dysfunctional country
[14:11] Speaker 4: at the level of its politics and organizationally, but within it,
[14:18] Speaker 4: there are places that are moving fast already. And you're
[14:22] Speaker 4: already alluded to Legos, which is the city of fourteen
[14:26] Speaker 4: million people, which already accounts for a fifth of the
[14:31] Speaker 4: Nigerian economy, just this one city, and it's the most
[14:36] Speaker 4: densely populated part of a densely populated country. And although
[14:40] Speaker 4: when you go there you think, oh my god, this
[14:43] Speaker 4: is just mayhem, but the fact is an awful lot
[14:46] Speaker 4: is getting done. You know, whether it is in terms
[14:49] Speaker 4: of Eliko dan Gort's industrial development, whether it's in terms
[14:53] Speaker 4: of infrastructure construction, whether it's in terms of the Nollywood
[14:58] Speaker 4: film industry or the Nigerian music industry that dominates the continent.
[15:04] Speaker 4: It's it's it's chaos, but it's productive chaos.
[15:08] Speaker 3: You know.
[15:08] Speaker 1: I remember twenty five years ago you would read these
[15:13] Speaker 1: things and they would say the importance the key to
[15:17] Speaker 1: economic development is microcredit and small businesses. And someone down't
[15:22] Speaker 1: gets a loan on their phone and then they buy
[15:24] Speaker 1: a cow, tractor, et cetera. Can you talk about the
[15:28] Speaker 1: importance of big companies in economic development? The flip side
[15:32] Speaker 1: of that, why like how Rare is a company like
[15:36] Speaker 1: Dingote compared to other potential industrial peers in Africa, And
[15:42] Speaker 1: why is the size itself a sort of reason to
[15:46] Speaker 1: think that this could have positive flywheel.
[15:49] Speaker 4: Effects Outside of South Africa, where obviously you have a
[15:54] Speaker 4: much more mature economy and so higher revenues in big companies.
[15:58] Speaker 4: Dangote is pretty unique, but Dangotte doesn't stand alone in
[16:04] Speaker 4: the sense that you see in different African countries the
[16:08] Speaker 4: growth of significant numbers now of companies that turn over
[16:12] Speaker 4: billions of dollars a year, So this is small change
[16:15] Speaker 4: in terms of US multinationals, but it's previously unheard of
[16:21] Speaker 4: in Africa. Quite a lot of these companies originate in
[16:26] Speaker 4: agriculture one way or another. They often are the manufacturing
[16:30] Speaker 4: end of agriculture, so they process food stuffs to produce
[16:34] Speaker 4: processed foods, which is what Africans are now consuming instead
[16:37] Speaker 4: of milling their own their own corn or whatever at home.
[16:42] Speaker 4: And then they go on and they do other things.
[16:44] Speaker 4: So there's a big, big firm, for instance, in Tanzania
[16:48] Speaker 4: called Buck Crazer comes out of milling, move into milling
[16:52] Speaker 4: in about seven or eight different African countries, but now
[16:55] Speaker 4: it's doing everything from owning a football club to owning
[16:58] Speaker 4: a TV station, to real a state to running the
[17:02] Speaker 4: boats out to Zanzibar. All of this stuff, so that
[17:07] Speaker 4: part of the question. The answer is that we are
[17:09] Speaker 4: seeing the growth of bigger companies in Africa. So then
[17:14] Speaker 4: why do we need bigger companies. We need them for
[17:17] Speaker 4: the same reason you need big companies in every economy,
[17:20] Speaker 4: because only big companies have the cash flows to really
[17:24] Speaker 4: be able to train people and move the needle on productivity.
[17:28] Speaker 4: All right, So you're right, there's a huge amount of
[17:30] Speaker 4: attention is paid to SMEs. It's not necessarily wrong, but
[17:34] Speaker 4: when people talk about SMEs, it's an employment consideration. They
[17:38] Speaker 4: employ people, they soak up a lot of unemployed people.
[17:41] Speaker 4: But if you want to move the needle on productivity,
[17:43] Speaker 4: you need big firms.
[17:46] Speaker 2: So the animal economic paradigm that we're most used to
[17:49] Speaker 2: discussing on odd lots is monkeys swinging from trees per
[17:52] Speaker 2: Ricardo Houseman's right theory. But there's another one that you
[17:56] Speaker 2: mentioned in your book, which is the flying geese paradigm,
[18:00] Speaker 2: with something like that apply to Africa in its current state.
[18:04] Speaker 2: Do you see any evidence that industries are sort of
[18:06] Speaker 2: trading up as countries actually advance and develop.
[18:12] Speaker 4: Yeah. I think that the clearest evidence of the evolution
[18:19] Speaker 4: of big firms is in the two most populous countries
[18:22] Speaker 4: at the moment in Nigeria and in Ethiopia, and you know,
[18:27] Speaker 4: some countries are going to have to lead first in
[18:30] Speaker 4: Africa as they did in Asia, and the flying geese
[18:33] Speaker 4: thing will ultimately prove to have some truth as it
[18:38] Speaker 4: did in Asia. It's just that the time frame tends
[18:42] Speaker 4: to be rather longer than the people who come up
[18:44] Speaker 4: with these theories imagine. You know, so, for instance, Cambodia
[18:47] Speaker 4: now has a pretty large garmenting sector employing millions of people.
[18:52] Speaker 4: But it did it did take about sixty seventy years
[18:56] Speaker 4: for that to happen.
[18:58] Speaker 1: What do we see in terms of what we would
[19:01] Speaker 1: call like moving up the manufacturing ladder? Do we see
[19:08] Speaker 1: things that we would call like you know, the story
[19:12] Speaker 1: was for years in China, it's like, Okay, they make
[19:15] Speaker 1: a million T shirts and that gets them like one
[19:18] Speaker 1: Boeing plane or something like that, and then eventually they
[19:21] Speaker 1: make more advanced things and they can import more Boeing planes.
[19:24] Speaker 1: Do we see that evidence currently of just the increased
[19:28] Speaker 1: ability to do reasonably complex, reasonably complex assembly.
[19:35] Speaker 4: Yeah, we do. We don't see it as across fifty
[19:39] Speaker 4: five countries sure in Africa, but we do. I mean,
[19:43] Speaker 4: you know, I've talked about dan Gote proving that he
[19:47] Speaker 4: can do three. You know, cements not uncomplex, Fertilizer quite complex.
[19:52] Speaker 4: You've got to do, You've got to work with with gas.
[19:55] Speaker 4: It's not just a straightforward manufacturing process. And an oil
[19:59] Speaker 4: we're finally refinery is unbelievably complex. So and you do
[20:05] Speaker 4: see you see signs of similar things in other countries.
[20:10] Speaker 4: And again to go to Ethiopia two three weeks ago,
[20:14] Speaker 4: I was standing in what will be the first float
[20:17] Speaker 4: glass plant making you know, regular modern glass used in
[20:24] Speaker 4: windows and whatever. So countries are moving forward in that respect.
[20:34] Speaker 4: I mean, one observation I'd make in Africa is that
[20:36] Speaker 4: governments tend to remain so weak that the private sector
[20:40] Speaker 4: has to do more heavy lifting than it ever had
[20:43] Speaker 4: to do. In Asia, where you had developmental states with
[20:47] Speaker 4: governments providing tremendous support to the to the private sector,
[20:51] Speaker 4: you tend not to get that in Africa. Often the
[20:55] Speaker 4: private sector is the most competent, capable player in the game.
[21:00] Speaker 4: But again, you know, it's demographics. We have to hope
[21:03] Speaker 4: that the depth and quality of African governments will improve,
[21:08] Speaker 4: and in theory it should do so. With thicker, denser populations,
[21:15] Speaker 4: because that means that you've got bigger cities and you
[21:18] Speaker 4: can raise more tax and more income is what a
[21:21] Speaker 4: lot of African governments need to enable them to do
[21:23] Speaker 4: more things.
[21:41] Speaker 2: So you mentioned being in Ethiopia a couple of weeks ago,
[21:44] Speaker 2: and I'm very curious how much time you're spending on
[21:46] Speaker 2: the ground in the region now, And I feel like
[21:48] Speaker 2: we should allow you to maybe provide a bit of
[21:50] Speaker 2: context here because a lot of people will know you
[21:52] Speaker 2: from how Asia works, which was this you know now
[21:55] Speaker 2: it's a seminal book, but when it came out it
[21:57] Speaker 2: was kind of out of consensus. And then suddenly you're
[22:01] Speaker 2: turning your attention to Africa. What's going on here? Why
[22:05] Speaker 2: the transition?
[22:07] Speaker 4: Well, it happened a while ago, back in about twenty eighteen,
[22:12] Speaker 4: So I mean, the first thing that happened was that
[22:14] Speaker 4: the Ethiopian and Rwandan governments invited me to go out
[22:19] Speaker 4: and see what they were doing. And I said, it's
[22:22] Speaker 4: very flattering that you're inviting me, but I don't know
[22:24] Speaker 4: anything about Africa, so there's no point. And I said, no, no, no,
[22:27] Speaker 4: we want to talk about Asian development policy. So I
[22:30] Speaker 4: went and I saw things that I thought were genuinely
[22:33] Speaker 4: interesting and impressive. And then subsequent to that, I met
[22:38] Speaker 4: with Bill Gates, who was a fan of how Asia works,
[22:41] Speaker 4: and at the end of that meeting, he said, Oh,
[22:43] Speaker 4: what I really want to know is what you think
[22:45] Speaker 4: about Africa, because that's where I'm spending all my money.
[22:48] Speaker 4: And I decided then that I would do the book
[22:51] Speaker 4: that came out this year. So I haven't been everywhere
[22:54] Speaker 4: in Africa. I've worked so far in about fifteen countries.
[22:58] Speaker 4: I don't go and spend my time in in what
[23:02] Speaker 4: you might call failed states because it's not the nature
[23:05] Speaker 4: of my work. My work's about economic development and progress.
[23:11] Speaker 4: But I have I thoroughly enjoyed what I've seen so far.
[23:17] Speaker 4: And yeah, and I'm reasonably positive. I mean I'm not
[23:20] Speaker 4: crazy positive, but I'm more positive than a lot of people.
[23:23] Speaker 2: I think, Well, can I just ask you a process question,
[23:27] Speaker 2: because if someone, if someone ever they wouldn't but if
[23:30] Speaker 2: they ever came to me and said, like, I don't
[23:32] Speaker 2: think so, we want you to write a book about Africa,
[23:35] Speaker 2: which is a very big place that I admittedly know
[23:38] Speaker 2: nothing about, I would be incredibly intimidated about starting that
[23:43] Speaker 2: research process. And just editing you know, basically the history
[23:47] Speaker 2: of economic development in all of Africa down to a
[23:51] Speaker 2: consumable publication. How did you decide, like what your research
[23:57] Speaker 2: process would look like, and how did you decide, i'd
[24:00] Speaker 2: which things to tackle versus others, because if I mean,
[24:04] Speaker 2: it's huge, it's a huge amount that you just took on.
[24:08] Speaker 4: Yes, I mean the process in the beginning was to
[24:11] Speaker 4: decide what to leave out. So you've got fifty five
[24:13] Speaker 4: countries and I whittled that down to fifteen that I
[24:17] Speaker 4: thought were important and would would tell the reader enough
[24:21] Speaker 4: about the continent as a whole, And of course that
[24:24] Speaker 4: then makes the work a bit more manageable. But I
[24:28] Speaker 4: knew that it was going to be a huge task
[24:30] Speaker 4: and I did it. You know, it's my main occupation
[24:32] Speaker 4: over a period of five years. So it took a long,
[24:35] Speaker 4: a long time.
[24:37] Speaker 1: One of the debates that's been going on that I see,
[24:40] Speaker 1: I mean part of you know, like obviously, like the
[24:43] Speaker 1: Asia stuff is just very hot right now. People. You
[24:46] Speaker 1: see the booming you know, the booming Chinese economy, the
[24:50] Speaker 1: booming Korean economy, et cetera. Something that I'm curious to
[24:54] Speaker 1: hear your take on is One of the things people
[24:58] Speaker 1: are saying is that China's manufacturing dominance, it's absolute efficiency gains, etc.
[25:06] Speaker 1: Are sort of depriving other parts of the world from
[25:09] Speaker 1: having climbed the same ladder that For example, China, Yes,
[25:13] Speaker 1: it can make some of the most advanced chips in
[25:16] Speaker 1: the world, but there might still be an entire city
[25:18] Speaker 1: that's devoted to making Christmas tinsel or something like that.
[25:22] Speaker 1: And this is the extremely low margin types of manufacturing
[25:27] Speaker 1: that historically might have been the first seeds of a
[25:30] Speaker 1: more complex ecosystem in another country. But on the other hand,
[25:35] Speaker 1: and some of this comes through in your book, you
[25:38] Speaker 1: could argue that some of the gains that we are
[25:40] Speaker 1: seeing in some of the encouraging African success stories are
[25:44] Speaker 1: in part thanks to cheap inputs from China. I'm thinking
[25:48] Speaker 1: like fertilizer and probably cheap machinery, etc. That allows for
[25:52] Speaker 1: improving agricultural productivity, which in your view is very key.
[25:58] Speaker 1: Why don't you talk to us like yours take on
[26:00] Speaker 1: the relationship between the incredible games we've seen in Asia
[26:04] Speaker 1: and China specifically and the implications therefore for African prospects
[26:09] Speaker 1: Right now?
[26:11] Speaker 4: Yeah, So, first of all, I think that there's people
[26:16] Speaker 4: tend to perceive China as continuing to export absolutely everything
[26:20] Speaker 4: that it's ever made. But if you look at the
[26:22] Speaker 4: trade data for China, what you see is that China's
[26:26] Speaker 4: actually exporting less and less of the low value added
[26:30] Speaker 4: stuff that it began with, and quite a lot of
[26:34] Speaker 4: that is going to places like Cambodia, which I just mentioned.
[26:37] Speaker 4: What China's really exporting at the moment is things like
[26:40] Speaker 4: electrical electric vehicles and other green energy products you know,
[26:46] Speaker 4: that are much more sort of cutting edge and capital
[26:48] Speaker 4: intensive in terms of what it did in the past.
[26:52] Speaker 4: So if Africa is competing against garmenting exports, for instance,
[26:56] Speaker 4: it's much more competing against stuff coming out of Miamar,
[27:00] Speaker 4: out of Cambodia, out of Sri Lanka, out of India.
[27:06] Speaker 4: So I think that Africa is capable of doing that.
[27:12] Speaker 4: It's problem. Its main problem is that it doesn't have
[27:15] Speaker 4: much commitment from government to developing manufacturing sectors outside of
[27:20] Speaker 4: to an extent, Nigeria and Ethiopia, which has always had
[27:25] Speaker 4: that commitment, Morocco to an extent as well, and then
[27:29] Speaker 4: one or two other enclaves in places like Madagascar, and
[27:32] Speaker 4: Africa needs to build that up. I think that telling
[27:37] Speaker 4: Africans that they're not going to succeed in manufacturing is
[27:41] Speaker 4: very dangerous and very bad advice. I absolutely think that
[27:46] Speaker 4: they can succeed in manufacturing, and the places that I've seen
[27:49] Speaker 4: them manufacturing, they seem to be doing fine. I don't
[27:52] Speaker 4: buy into the idea that there's been a change or
[27:57] Speaker 4: there is an ongoing change now based around robot takes
[28:00] Speaker 4: an AI that means that there will be no manufacturing
[28:03] Speaker 4: development in Africa. You're right that some cheap inputs from
[28:08] Speaker 4: China have been helpful to development in Africa. But the
[28:11] Speaker 4: thing I would emphasize much more than that that's come
[28:14] Speaker 4: from China is large amounts of manufacturing investments. So if
[28:19] Speaker 4: you look at the FTS micro database of FDI for
[28:23] Speaker 4: last year, China put twelve and a half billion dollars
[28:27] Speaker 4: into manufacturing investment in Africa. And if you then dig
[28:33] Speaker 4: into like why are they doing that, the answer is
[28:36] Speaker 4: usually because they can get better margins manufacturing in Africa,
[28:41] Speaker 4: particularly for African consumption, than they can in China. I mean,
[28:45] Speaker 4: an awful lot of manufacturing in China today has very
[28:49] Speaker 4: very low margins. So Chinese money is looking you know,
[28:53] Speaker 4: steel is one example, steel in China at the moment
[28:59] Speaker 4: sells for about five to six hundred dollars a ton
[29:02] Speaker 4: in Africa excels for about a thousand. So unsurprisingly a
[29:05] Speaker 4: number of Chinese firms have relocated steel mills to Africa.
[29:10] Speaker 4: There's one in Zimbabwe, there's one in South Africa, there's
[29:14] Speaker 4: one in Algeria, and there's one that's just been signed
[29:17] Speaker 4: in Ethiopia. And it's all about margins in the end.
[29:23] Speaker 4: And then you know, Chinese firms also investing widely in
[29:27] Speaker 4: all kinds of other businesses, ceramics, you know, to produce
[29:33] Speaker 4: bathroom staff that's consumed in vast quantities in developing countries,
[29:39] Speaker 4: all sorts of things. So I don't buy the idea
[29:42] Speaker 4: that there's this paradigm change in manufacturing. And I think
[29:48] Speaker 4: the final point there I would make is that you know,
[29:50] Speaker 4: when you get conversations about robotics and AI and the
[29:56] Speaker 4: effect on manufacturing, they tend they tend to never introduced
[30:00] Speaker 4: the question of cost. All right, So robots cost a
[30:04] Speaker 4: lot of money, and they are also a sunk cost
[30:07] Speaker 4: that when you buy them for your factory, you pay
[30:09] Speaker 4: for the whole thing upfront. On the other hand, in
[30:12] Speaker 4: Africa at the moment, someone like Madagascar, you can get
[30:15] Speaker 4: labor for sixty dollars a month, right what it costs
[30:19] Speaker 4: in China in the mid nineties, not adjusted for inflation.
[30:22] Speaker 4: So as my feeling is that any manufacturer who can
[30:26] Speaker 4: make use of labor instead of paying upfront for robots
[30:32] Speaker 4: is likely to continue to do so, not least again
[30:36] Speaker 4: because people don't talk about the inflexibility of robots. Okay,
[30:40] Speaker 4: they can do a certain amount when your demand goes up.
[30:45] Speaker 4: You can't turn the speed up on most robots in factories. Okay,
[30:50] Speaker 4: they continue to do the same amount. You've got to
[30:53] Speaker 4: get new robots, but that's not quick, whereas when you
[30:56] Speaker 4: need to hire and fire labor, that is very quick
[30:59] Speaker 4: in developing countries.
[31:01] Speaker 2: So I have a bunch of questions, specific questions on
[31:03] Speaker 2: Africa's manufacturing potential, but just a step back question first.
[31:08] Speaker 2: So you emphasize the development of manufacturing as like this
[31:12] Speaker 2: important step in the growth of an economy, and you
[31:16] Speaker 2: do this both in how Asia works and how Africa works.
[31:20] Speaker 2: Explain what it is that seems to make manufacturing in
[31:24] Speaker 2: some sense special when it comes to economic development, And
[31:28] Speaker 2: could you ever have a situation in Africa, where I
[31:31] Speaker 2: don't know, maybe a government is like, I don't want
[31:33] Speaker 2: to mass produce a bunch of toilet ceramics. I want
[31:36] Speaker 2: to leap frog ahead to a service industry and just
[31:39] Speaker 2: start there.
[31:42] Speaker 4: Yeah. So what makes manufacturing special is that you can
[31:46] Speaker 4: take people, usually out of the rural economy, out of
[31:49] Speaker 4: the farm economy, and bring them into the modern urban economy.
[31:52] Speaker 4: And you can do that with relatively low levels of education.
[31:56] Speaker 4: They just need to be numerate and literate and they're
[31:59] Speaker 4: in a factory, and then they largely learn on the job,
[32:02] Speaker 4: and factories become the kind of vocational training schools for
[32:07] Speaker 4: developing economies, so the whole process is affordable to the
[32:11] Speaker 4: developing economy. The problem that you have when you want
[32:13] Speaker 4: to jump into value added services is that value added
[32:16] Speaker 4: services almost always require a higher level of education and training.
[32:21] Speaker 4: So who's going to pay for that. The person who's
[32:24] Speaker 4: coming out of agriculture hasn't got the money to pay
[32:26] Speaker 4: for that, and you know, the employer, you know, so
[32:30] Speaker 4: the government's going to cut with the money. You know,
[32:32] Speaker 4: the government's not going to have the money because definitionally
[32:35] Speaker 4: it's the government of a of a poor country. You know,
[32:41] Speaker 4: And the best example really to look to is always
[32:45] Speaker 4: India for where you go with like value added services
[32:49] Speaker 4: because of the Indian Institute of Technology, the history there,
[32:53] Speaker 4: They've always had a supply of highly trained tech graduates
[32:57] Speaker 4: who allowed entrepreneurs to build very successful IT businesses. But
[33:03] Speaker 4: that IT sector in India still only employees about six
[33:07] Speaker 4: million people. It's just nothing compared with the employment generated
[33:12] Speaker 4: by manufacturing, you know. And then you look at the
[33:15] Speaker 4: overall impact on growth India, which has never really had
[33:18] Speaker 4: a serious manufacturing strategy, although Mody kind of talks it
[33:23] Speaker 4: up at the moment, but it's never really had one.
[33:26] Speaker 4: If you look back to the period since nineteen ninety
[33:29] Speaker 4: one when India's reforms began, India's grown at four point
[33:33] Speaker 4: two percent year average. Again, if you look at China,
[33:37] Speaker 4: which really maxed out support for manufacturing, that's that's an
[33:44] Speaker 4: economy that grew for thirty years at ten percent a year.
[33:48] Speaker 4: That to me is the difference. And so I often
[33:52] Speaker 4: say to you know, people in countries like Nigeria and
[33:57] Speaker 4: if you be well, you know, what do you want
[33:58] Speaker 4: to be? Do you want to be India or you
[34:00] Speaker 4: want to be something more like China.
[34:03] Speaker 1: I'm curious like you mentioned that one of the issues
[34:07] Speaker 1: is that the sort of like the developmentalist mindset as
[34:11] Speaker 1: you understand it, or the optimal developmentalist mindset is unevenly
[34:15] Speaker 1: distributed throughout Africa. So there are leaders whom might want
[34:19] Speaker 1: to talk to you about like, well, what is a
[34:21] Speaker 1: realistic way in which we can develop along the East
[34:24] Speaker 1: Asian path, and then others not when you look at
[34:27] Speaker 1: the uneven distribution of this, is this just about like
[34:31] Speaker 1: some people have different opinions, or is this about like
[34:34] Speaker 1: there is something endemic to the politics in certain countries
[34:39] Speaker 1: such that whoever is going to be the person that
[34:42] Speaker 1: winds up in the seat, winds up as president and
[34:45] Speaker 1: so forth, is maybe going to be more likely to
[34:49] Speaker 1: fundamentally say, oh, their political allegiance to say medium sized
[34:54] Speaker 1: farms or something like that, such that the developmentalist approach
[35:00] Speaker 1: it is going to be off the table because that
[35:02] Speaker 1: is not the politics out from which they come.
[35:06] Speaker 4: Well, I have never managed to get data to sort
[35:10] Speaker 4: of nail this down very well, but my personal view
[35:13] Speaker 4: is that endemic to the politics the politics of Africa
[35:16] Speaker 4: is the politics in Africa are particularly aristocratic, So you
[35:21] Speaker 4: particularly have leaders and the people around them who are
[35:26] Speaker 4: aristocrats with all the kind of prejudices that go with that.
[35:29] Speaker 4: They don't like small farmers, they like big farms. They're
[35:33] Speaker 4: not terribly interested in manufacturing. It's kind of, you know,
[35:37] Speaker 4: sitting in my office a way for people to come
[35:39] Speaker 4: to meet. That has been the that's been to me,
[35:43] Speaker 4: the reality and the tradition. But I think that what
[35:46] Speaker 4: is also very important is that demonstration, what economists called
[35:50] Speaker 4: demonstration effects, count for a lot, and that as countries
[35:57] Speaker 4: see places like Lego or economies like Ethiopia moving fast. Right,
[36:04] Speaker 4: Ethiopia has not grown less than five percent for twenty
[36:09] Speaker 4: five years now. It was the poorest country in the world.
[36:12] Speaker 4: That's why it's taking a long time again on the radar.
[36:15] Speaker 4: You know, when you're a one hundred bucks GDP per
[36:18] Speaker 4: capita to start, you know, the maths are pretty ugly
[36:23] Speaker 4: for a long period. But now it's still growing ten
[36:26] Speaker 4: percent a year and it's at a couple of thousand dollars,
[36:28] Speaker 4: so that makes some difference. But you know, so the
[36:31] Speaker 4: point is that when people see what's going on in
[36:34] Speaker 4: these countries, as was the case in East Asia, when
[36:37] Speaker 4: people first saw what was going on in Japan and
[36:40] Speaker 4: subsequently saw what was going on in career in Taiwan.
[36:43] Speaker 4: It makes a difference, you know, it becomes a self
[36:47] Speaker 4: reinforcing positive spiral.
[36:52] Speaker 2: Wait, since you brought up Ethiopia, we know, well, your
[36:57] Speaker 2: book came out earlier this year. Before I think it
[37:00] Speaker 2: was in twenty twenty, Ethiopia there was a civil war
[37:03] Speaker 2: that broke out in Ethiopia. So I'm curious how you
[37:07] Speaker 2: think of the relationship between economic development, the Ethiopian economic
[37:11] Speaker 2: success story versus political stability, because I imagine, you know,
[37:16] Speaker 2: had you maybe written this book in twenty nineteen or
[37:19] Speaker 2: something like that, you already hold out Ethiopia as a
[37:23] Speaker 2: success story in the current version, but maybe it would
[37:25] Speaker 2: have been even more of a success story before the
[37:28] Speaker 2: civil war.
[37:31] Speaker 4: To be honest, I mean, the remarkable thing is that
[37:33] Speaker 4: the policy tracks that were laid in Ethiopia prior to
[37:38] Speaker 4: the civil war, combined with some adjustments and more opening
[37:41] Speaker 4: to the private sector that's come under RB the current
[37:44] Speaker 4: PM have just meant that the I mean, the economy
[37:47] Speaker 4: kept growing five six percent through the civil war. So
[37:50] Speaker 4: you know that is that's what happens when you build
[37:54] Speaker 4: institutional capability and you get the right policies in place.
[38:00] Speaker 4: But it's a fact of life in Africa. And again
[38:04] Speaker 4: it goes back to demographics that ethnic cleavage is present
[38:08] Speaker 4: in pretty much every society on the continent, right because
[38:13] Speaker 4: historically population was so sparse in Africa, the different tribal
[38:19] Speaker 4: for want of a better term, groups didn't, it seems
[38:24] Speaker 4: from what historians can make out, come into conflict very
[38:27] Speaker 4: much because whenever conflict was brewing, one group or the
[38:31] Speaker 4: other would just take off, and there was always more
[38:33] Speaker 4: land available. There was always massive amounts of land for people,
[38:36] Speaker 4: and so all these thousands of different groups with three
[38:40] Speaker 4: thousand different languages continued to survive. But of course today
[38:45] Speaker 4: with population up to one point five billion, going to
[38:48] Speaker 4: two point five billion and twenty fifty, these ethnic groups
[38:53] Speaker 4: now are pushing up against each other in a manner
[38:56] Speaker 4: that they never have before, and they have to find
[38:59] Speaker 4: ways of getting passed these kind of visceral ethnic reactions
[39:07] Speaker 4: that they sometimes have.
[39:09] Speaker 2: You mentioned something there that reminded me of what I
[39:11] Speaker 2: wanted to ask you about export manufacturing in particular, which is,
[39:15] Speaker 2: again you think of Africa, and as you said, it's
[39:19] Speaker 2: just this huge amount of land, including like some very
[39:22] Speaker 2: very remote tracts of land and nations, landlocked nations in
[39:27] Speaker 2: the middle of the continent where it takes days and
[39:29] Speaker 2: days and days to actually travel anywhere else. How much
[39:33] Speaker 2: of a limitation is that on manufacturing for export purposes
[39:37] Speaker 2: in particular, especially since in a lot of these countries
[39:40] Speaker 2: we're talking about places that don't have a lot of infrastructure,
[39:44] Speaker 2: and so I would imagine that some of your labor
[39:48] Speaker 2: competitive edge starts to wear off once you start factoring
[39:51] Speaker 2: in the need to you know, put manufactured goods on
[39:55] Speaker 2: a train for three weeks or something like that.
[39:58] Speaker 4: Yeah, so, just contextualizing the bigness of Africa, you can
[40:04] Speaker 4: fit China, India, Europe, and the United States inside Africa.
[40:10] Speaker 4: That's how big it is. It's crazy big. So and
[40:15] Speaker 4: then your question, I think makes a lot of sense
[40:19] Speaker 4: so long as what we are thinking about is Africa
[40:21] Speaker 4: exporting to other parts of the world. But my response
[40:24] Speaker 4: to that would be that I think that a lot
[40:26] Speaker 4: of export growth in Africa, most export growth in Africa
[40:31] Speaker 4: is going to come from exporting to other states within
[40:34] Speaker 4: the African continent, And the data are beginning to show
[40:38] Speaker 4: that the rate of growth of exports within the continent
[40:43] Speaker 4: is already growing faster than to other parts of the world.
[40:47] Speaker 4: Doesn't mean that Africa won't export to other parts of
[40:51] Speaker 4: the world. It just kind of depends where you are
[40:54] Speaker 4: on this huge continent. If you're up in North Africa,
[40:58] Speaker 4: if you're in Morocco and you're only fourteen kilometers away
[41:03] Speaker 4: from Europe, it makes sense to be exporting, you know,
[41:06] Speaker 4: which is why two of the biggest French car companies
[41:10] Speaker 4: are making their cars they're now and aerospace and other
[41:15] Speaker 4: manufacturers that need to be close to Europe but want
[41:19] Speaker 4: low costs have gone there to Morocco. To Morocco, yeah, up,
[41:23] Speaker 4: and there's a development called med Tangier up there, just
[41:29] Speaker 4: basically near the closest bit to Europe, and they've opened
[41:33] Speaker 4: industrial parks. Not huge, but there's you know, one hundred
[41:36] Speaker 4: thousand plus people working in the industrial parks that are
[41:39] Speaker 4: doing cars and aerospace stuff and other things.
[41:45] Speaker 1: Can you talk a little bit more about I think
[41:48] Speaker 1: it was in your book that I saw, or maybe
[41:50] Speaker 1: it was something that it was probably in your book,
[41:52] Speaker 1: maybe it's something that I saw after reading it, But
[41:54] Speaker 1: like this phenomena that what makes Africa or what had
[41:59] Speaker 1: made Africa unusual, is that you didn't have this great
[42:04] Speaker 1: landless peasant movement that there wasn't you know, because part
[42:07] Speaker 1: of the stories of Asia it's like land reform, right,
[42:10] Speaker 1: you have like some big transfer from wealthy landholders to
[42:15] Speaker 1: the public, and that in Africa that had never really
[42:19] Speaker 1: been the issue, and that makes it a fundamentally different story.
[42:23] Speaker 1: Can you talk a little bit more about just the
[42:25] Speaker 1: sort of weird reverberations that come from a underlying condition
[42:31] Speaker 1: where land is just not a particularly scarce, particularly scarce resource.
[42:35] Speaker 4: Yeah, it's very very on Asian. So after the Second
[42:40] Speaker 4: World War in East Asia, land was the most explosive
[42:44] Speaker 4: issue because there just wasn't enough of it, And that's
[42:48] Speaker 4: why the Chinese Communist Party won control of the country
[42:51] Speaker 4: largely by redistributing land and giving land to people who
[42:54] Speaker 4: agreed to fight for the People's Liberation Army. And then
[42:58] Speaker 4: why the United States reacted by supporting land reform programs
[43:02] Speaker 4: in Japan and in Korea and in Taiwan, and even
[43:07] Speaker 4: in the seventies when the US was losing in Vietnam
[43:13] Speaker 4: sent people into start doing land reform just before the
[43:17] Speaker 4: just before the fall of Saigon, but it was it
[43:20] Speaker 4: was too late. So that is demographics and then the
[43:25] Speaker 4: demographics of Africa, as we've been saying, is very sparse population,
[43:29] Speaker 4: so everybody's got land. The only place that I'm aware
[43:33] Speaker 4: of in Africa in fifty five countries that ever had
[43:36] Speaker 4: any kind of land reform was well, there was Kenya.
[43:40] Speaker 4: I suppose there was in the highlands in Kenya. There was,
[43:43] Speaker 4: but I was thinking of Zanzibar, which was a very
[43:48] Speaker 4: particular case because you had these kind of this sort
[43:50] Speaker 4: of feudal amani elite who owned all the land when
[43:55] Speaker 4: it became independent. But no, that's been the case, and
[43:58] Speaker 4: there are still large parts of countries that have superabundant land.
[44:04] Speaker 4: I mean somewhere like Tanzania, there's still loads of land left.
[44:07] Speaker 4: But because of population growth, there are other parts of
[44:11] Speaker 4: the African continent where there is now some rising land pressure,
[44:15] Speaker 4: so around the Great Lakes, in the Ethiopian Highlands and
[44:20] Speaker 4: some bits of West Africa as well. But it, yes,
[44:24] Speaker 4: as you say, it's not been an issue scarcity of
[44:28] Speaker 4: land in Africa. The problem in Africa was scarcity of people.
[44:33] Speaker 2: Well, but there are still scarcity of assets that make
[44:36] Speaker 2: the land viable as well. Right, And the only reason
[44:39] Speaker 2: I know that is because I read the chapter on
[44:41] Speaker 2: Botswana where you talk about how you know, there's loads
[44:44] Speaker 2: of land, there's loads of cattle, but all the elites
[44:47] Speaker 2: own the boreholes that produce the water for the cattle,
[44:52] Speaker 2: and so you still end up with a very inequal
[44:55] Speaker 2: economic society.
[44:57] Speaker 4: Yes, exactly. You can still get that as a tendency
[45:01] Speaker 4: all over Africa today. As demand for food starts increases,
[45:07] Speaker 4: as Africa has now had for twenty five years the
[45:10] Speaker 4: fastest rate of the whole continent has had the fastest
[45:13] Speaker 4: rate of agricultural growth in the world are just over
[45:17] Speaker 4: four percent. There is the tendency for urban, urban, wealthy people,
[45:24] Speaker 4: you know what I refer to as African kulas in
[45:27] Speaker 4: the book, to buy up chunks of land, or least
[45:31] Speaker 4: chunks of land and displace peasant pharmer. So for the
[45:34] Speaker 4: first time now in Africa, you're beginning to see a
[45:37] Speaker 4: kind of landless peasantry, something that has never existed before.
[45:41] Speaker 1: Tracy, do you know what the etymological root of the
[45:46] Speaker 1: word kulak is?
[45:47] Speaker 4: No? Do you know, Joe, I don't know.
[45:51] Speaker 2: No, it's good, you've stumped us.
[45:53] Speaker 1: Yeah, I mean's fists and they were perceived to be
[45:56] Speaker 1: type fisted, and so that they are like, Yeah, that's
[45:59] Speaker 1: like that word came from. That's like the one thing
[46:01] Speaker 1: I know about them. All right, last question for me,
[46:04] Speaker 1: you know, like I've never been.
[46:06] Speaker 4: I do want to.
[46:07] Speaker 1: Travel to Africa, but it's a whole continent. I've never
[46:10] Speaker 1: been particularly interested in the past because I'm not interested
[46:14] Speaker 1: like going on you know, seeing wild animals or something
[46:17] Speaker 1: like that. I want to visit a city. I like
[46:21] Speaker 1: to see how people live and how urban economies are happening,
[46:25] Speaker 1: et cetera. Where would you recommend I buy a ticket to?
[46:29] Speaker 4: I think you'd go to see Legos. Okay, it's just
[46:32] Speaker 4: it's just insane. I mean, just the people, the chaos,
[46:39] Speaker 4: you know.
[46:39] Speaker 1: And yeah, he just I got my son a jersey
[46:45] Speaker 1: from when we're in Madrid. I got my son a
[46:48] Speaker 1: jersey for the team Athletico Madrid. And on the jersey
[46:52] Speaker 1: they're sponsored by the Rwanda Tourism Board, and so on
[46:55] Speaker 1: his jersey that he wears, it says visit Rwanda. Would
[46:59] Speaker 1: it would you recommend? Also, Kigalli chip.
[47:04] Speaker 4: Yeah, I mean that then will blow your mind because
[47:07] Speaker 4: it's about the cleanest city in the world. You know.
[47:10] Speaker 4: Kagami sends people ours on Saturday morning picking up litter.
[47:13] Speaker 4: There'sn't much litter to pick up, but I mean, you know, publishing,
[47:17] Speaker 4: polishing the city.
[47:18] Speaker 1: We haven't really talked about Rwanda much, but as we
[47:22] Speaker 1: famously know, its president has talked about this country could
[47:27] Speaker 1: be the Singapore of Africa. And obviously, when you're.
[47:32] Speaker 2: Talking about yourself, is very leak on you.
[47:34] Speaker 1: Yeah, right and so right. So when you mentioned the
[47:37] Speaker 1: cleanliness aspect, that's interesting. Where is Rwanda on that trajectory?
[47:44] Speaker 1: And could you see a plausibility where it's a tiny,
[47:47] Speaker 1: landlocked country unlike Singapore that has ports and stuff like that.
[47:52] Speaker 1: But could it be the sort of like financial capital
[47:55] Speaker 1: of Africa where that's the first stop for money which
[47:58] Speaker 1: then is invested elsewhere.
[48:02] Speaker 4: I don't know that it will be. I mean, I
[48:04] Speaker 4: don't think there'll be a single financial center for Africa.
[48:08] Speaker 4: I think that's unlikely. But I think that Kagali can
[48:12] Speaker 4: be one of them. You know, they've done a very
[48:14] Speaker 4: good job bringing in tech people, They've done a very
[48:18] Speaker 4: good job making it a conference center. They've done a
[48:22] Speaker 4: very good job bringing in various multi multilateral organizations to
[48:28] Speaker 4: be headquartered there. And of course, you know what no
[48:32] Speaker 4: one talks about is the fact that Kagame has expanded
[48:36] Speaker 4: his country by essentially manipulating eastern DRC, separating it from
[48:43] Speaker 4: the rest of the DRC, and running it as a
[48:46] Speaker 4: sort of Rwandant colony, which is handy because it's got,
[48:51] Speaker 4: you know, some pretty decent mineral reserves which all get
[48:55] Speaker 4: run through Rwanda. I mean, the world has got a
[48:58] Speaker 4: little bit more tough in diplomatic terms on Kagami in
[49:04] Speaker 4: the last of the two three years, but not not
[49:08] Speaker 4: very tough.
[49:09] Speaker 3: And yeah, he's.
[49:14] Speaker 4: He plays an extraordinary but I think, you know, utterly ruthless.
[49:20] Speaker 2: Well, actually, this just reminded me there's a through line
[49:24] Speaker 2: between how Asia works and how Africa works. There's a
[49:26] Speaker 2: bunch of them. But the other one we haven't talked
[49:28] Speaker 2: about yet is the importance of finance and I guess
[49:31] Speaker 2: directed lending to developmental projects. And it seems like Rhonda
[49:37] Speaker 2: in particular setting itself up as the sort of Singaporean model.
[49:41] Speaker 2: I think they chose not to have capital controls at all.
[49:45] Speaker 2: But talk to us a little bit about how finance
[49:48] Speaker 2: plays out in all of this. And also when you
[49:52] Speaker 2: think about finance in developing economies, you might often think
[49:56] Speaker 2: about corruption and the difference between a legitimate developmental loan
[50:00] Speaker 2: to an upcoming company versus a crony of the president
[50:05] Speaker 2: or something can sometimes be very narrow. But what's the
[50:08] Speaker 2: importance of finance here and how are you thinking about it?
[50:11] Speaker 4: Okay, well, I mean first on Rwanda. You're right, so
[50:14] Speaker 4: Rwanda wants to be Singapore. So are they are looking
[50:18] Speaker 4: to have no capital controls so that money can freely
[50:21] Speaker 4: come in and out because they want to get all
[50:24] Speaker 4: money related to Eastern DRC money from other wealthy people
[50:29] Speaker 4: who feel secure about keeping it in Kgale. So they're
[50:32] Speaker 4: not in a developmental game whereby they want to control
[50:37] Speaker 4: their domestic finances for development. But that is what the
[50:42] Speaker 4: tradition from East Asia is. When you have a developmental state,
[50:47] Speaker 4: one of the key things that you do is that
[50:49] Speaker 4: you have capital controls so that your domestic savings are
[50:52] Speaker 4: locked down and your population can't decide to move its
[50:56] Speaker 4: money to New York to get a better rate of return.
[50:58] Speaker 4: The money stays at home. And then you have a
[51:00] Speaker 4: banking system which and there are a number of ways,
[51:03] Speaker 4: there are a number of ways in which has successfully
[51:05] Speaker 4: been done, but essentially you have a banking system which
[51:08] Speaker 4: takes a lot of direction from government and also gets
[51:11] Speaker 4: a bit of subsidy fiscal subsidy as well to support
[51:14] Speaker 4: it for losses that may be incurred in supporting industrial policy.
[51:18] Speaker 4: So you know, inevitably, money is very important, and I
[51:23] Speaker 4: wouldn't say that things have changed much in terms of
[51:26] Speaker 4: what you want to do if you are more of
[51:30] Speaker 4: a developmental state. So I mean, I've been very intrigued
[51:33] Speaker 4: by the reporting of Ethiopia over the last couple of years,
[51:36] Speaker 4: which has been I don't know on Bloomberg, but widely
[51:39] Speaker 4: reported to have got rid of capital controls, which is
[51:43] Speaker 4: completely untrue. They've basically they've basically moved to where China
[51:48] Speaker 4: is all right, which as we all know as as
[51:51] Speaker 4: capital controls and so you know that. But they're opening.
[51:55] Speaker 4: They're open on the on the trade account, so that
[51:57] Speaker 4: investors in Ethiopia now know that the foreign exchange they
[52:01] Speaker 4: can get it in and they can remit it to
[52:03] Speaker 4: their ultimate owners. However, across Africa, if we look across
[52:08] Speaker 4: fifty five countries, what we see is that most countries
[52:12] Speaker 4: got rid of capital controls, and they did so on
[52:15] Speaker 4: the advice of the IMF and the World Bank. That
[52:18] Speaker 4: means that then you get private banks that are interested
[52:21] Speaker 4: to come in and invest, and they go, oh, look
[52:24] Speaker 4: all these foreign banks have come and invested. That isn't
[52:27] Speaker 4: that good. But what the private banks do that come
[52:30] Speaker 4: and invest is basically just push out consumer credit, okay,
[52:34] Speaker 4: and it's not conducive to development of domestic industrial capacity
[52:41] Speaker 4: just to have your banks lending people money to buy
[52:44] Speaker 4: important motorcycles.
[52:47] Speaker 1: Joe Studwell, this is fascinating. We could go on for
[52:50] Speaker 1: a very long time. It's a shame though it took
[52:52] Speaker 1: us so long for us to get you on the podcast.
[52:55] Speaker 1: But very fascinating new book, very fascinating new work. And
[52:58] Speaker 1: I think something that you know, I feel as though
[53:03] Speaker 1: so many of the stories we hear these days are
[53:05] Speaker 1: just over and over again. China does this, Ai does this,
[53:08] Speaker 1: China Trump did this. I find it refreshing to hear
[53:12] Speaker 1: this topic that it kind of feels on zeitgeisty but
[53:15] Speaker 1: also very interesting and important. To really appreciate you taking
[53:19] Speaker 1: your time, Thank you, seeing you guys. I thought that
[53:33] Speaker 1: was super interesting. Other it was like, really, you know,
[53:36] Speaker 1: look you're talking about like it's just such a cliche
[53:39] Speaker 1: and you have to mention Africa as a place to
[53:41] Speaker 1: just extraordinarily diverse and like there's no common geography or
[53:46] Speaker 1: common anything. The point about like land abundance and labor
[53:53] Speaker 1: sparsity as this sort of like defining aspect. And then
[53:58] Speaker 1: the way I hadn't really like put it together, which
[54:01] Speaker 1: is like if you can have the fortunate, you know,
[54:04] Speaker 1: tribes that are like totally separate, and then suddenly you're
[54:08] Speaker 1: drawing square around them or you're drubbing shape around them,
[54:12] Speaker 1: and they have like no internal cohesiveness, you can understand
[54:16] Speaker 1: how that creates the sort of like permanent, permanent political problem.
[54:21] Speaker 4: Right.
[54:21] Speaker 2: Well, the thing I find really interesting about Joe the
[54:24] Speaker 2: other Joe's argument is the population density aspect of it,
[54:28] Speaker 2: because that feels to me like something which is changing.
[54:32] Speaker 2: You can see it in the numbers that it's starting
[54:35] Speaker 2: to change. And if you do get more dense cities,
[54:40] Speaker 2: I guess just more customers for potential goods produced within Africa,
[54:45] Speaker 2: then that takes care of a lot of the manufacturing
[54:48] Speaker 2: challenges that you could foresee. When you think about manufacturing,
[54:51] Speaker 2: you think normally like, Okay, we're going to produce stuff cheaply,
[54:55] Speaker 2: and we're going to export it, and then we're going
[54:57] Speaker 2: to do the flying geese thing. And then we're going
[54:59] Speaker 2: to do the monkeys from the trees thing, and that's
[55:02] Speaker 2: how we become a developed economy. But then, as you
[55:05] Speaker 2: were pointing out, you know, development doesn't happen in a vacuum.
[55:09] Speaker 2: You have huge competition from places like China. You also
[55:13] Speaker 2: have a broad landscape globally of just people becoming more
[55:16] Speaker 2: protective with their own trade, right, So that would be
[55:20] Speaker 2: a massive challenge for a place like Africa. Again, not
[55:24] Speaker 2: a monolith, but we're talking about it as such. But
[55:28] Speaker 2: if the population density means that the domestic market actually increases,
[55:32] Speaker 2: then then that's a huge market. It could be a
[55:35] Speaker 2: huge market totally.
[55:37] Speaker 1: By the way, did you see this story didn't come
[55:40] Speaker 1: up that Morocco named highway after President Trump? No, Okay,
[55:47] Speaker 1: so there's a story that it's like it's funny and
[55:50] Speaker 1: they for whatever the reason, there's a Trump Highway. And
[55:53] Speaker 1: then I saw that several I saw several weeks later
[55:56] Speaker 1: after that news there that there is an attempt to
[56:00] Speaker 1: build a coastal East African natural gas pipeline that would
[56:06] Speaker 1: go through Morocco into Europe. And this is the key
[56:09] Speaker 1: bit that they're hoping to get financing from the American
[56:12] Speaker 1: Export Import Bank to build that, And suddenly I was like, oh,
[56:17] Speaker 1: maybe I do get why you would want to name
[56:18] Speaker 1: your your highway after President Trump. But like, anyway, can
[56:22] Speaker 1: I say.
[56:23] Speaker 2: One thing about Moroccan highways. I know you're a fan
[56:25] Speaker 2: of BUCkies. Oh yeah, Moroccan gas stations are amazing.
[56:30] Speaker 1: You would love them.
[56:30] Speaker 2: And they actually have really really good food and are
[56:33] Speaker 2: extremely dependable and for the most part clean. But the
[56:36] Speaker 2: food is the thing to go for.
[56:38] Speaker 1: I really want to go. So, okay, we're going to
[56:40] Speaker 1: do live odd lots in U at the ding Gote
[56:44] Speaker 1: or you know, we'll take a tour of the Dangote refinery.
[56:48] Speaker 2: Oh go to Legos with you.
[56:50] Speaker 1: We should go and great, we'll make that happen.
[56:53] Speaker 2: All right, shall we leave it there?
[56:54] Speaker 1: Let's leave it there.
[56:55] Speaker 2: This has been another episode of the All Thoughts podcast.
[56:58] Speaker 2: I'm Tracy Alloway. You can follow me Tracy Alloway, and.
[57:01] Speaker 1: I'm joll w Wasenthal. You can follow me at the Stalwart.
[57:04] Speaker 1: Follow our guest Joe Studwell, He's at Joe Studwell. Follow
[57:08] Speaker 1: our producers Kerman Rodriguez at Kerman armand Dashel Bennett at Dashbod,
[57:12] Speaker 1: Calebrooks at Calebrooks and Kevin Lozano at Kevin Lloyd Lozano.
[57:16] Speaker 2: And for more Oudlots content, you should check out our
[57:18] Speaker 2: daily newsletter. You can find that at Bloomberg dot com
[57:21] Speaker 2: Forward slash od Lots.
[57:22] Speaker 1: And you can chat about all of these topics twenty
[57:24] Speaker 1: four to seven in our discord discord dot gg slash odlines.
[57:28] Speaker 2: And if you like this episode, if you want us
[57:30] Speaker 2: to go on a trip to Legos, then please leave
[57:32] Speaker 2: us a positive review on your favorite podcast platform. And remember,
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[57:43] Speaker 2: and follow the instructions there. Thanks for listening, Benad

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