The Economist: Africa must embrace its least fashionable idea – a capitalist revolution

Africa is on the cusp of transformation. With its youth set to dominate the global workforce by 2030, the continent holds immense potential. But unlocking this promise requires a radical shift. Leaders must abandon outdated economic models, embrace growth, and foster an entrepreneurial revolution..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..From The Economist, published under licence. The original article can be found on www.economist.com© 2024 The Economist Newspaper Limited. All rights reserved..The Economist .The world's poorest continent should embrace its least fashionable idea___STEADY_PAYWALL___.In the coming years Africa will become more important than at any time in the modern era. Over the next decade its share of the world's population is expected to reach 21%, up from 13% in 2000, 9% in 1950 and 11% in 1800. As the rest of the world ages, Africa will become a crucial source of labour: more than half the young people entering the global workforce in 2030 will be African..This is a great opportunity for the poorest continent. But if its 54 countries are to seize it, they will have to do something exceptional: break with their own past and with the dismal statist orthodoxy that now grips much of the world. Africa's leaders will have to embrace business, growth and free markets. They will need to unleash a capitalist revolution..If you follow Africa from afar you will be aware of some of its troubles, such as the devastating civil war in Sudan; and some of its bright spots, such as the global hunger for Afrobeats—streams on Spotify rose by 34% in 2024. Less easy to make out is the shocking economic reality documented in our special report this week and which we call the "Africa gap"..In the past decade, as America, Europe and Asia have been transformed by technology and politics, Africa has, largely unnoticed, slipped further behind. Income per person has fallen from a third of that in the rest of the world in 2000 to a quarter. Output per head may be no higher in 2026 than it was in 2015. Two giants, Nigeria and South Africa, have done atrociously. Only a few countries, such as Ivory Coast and Rwanda, have bucked the trend..Behind those figures lies a depressing record of stagnant productivity. African countries are experiencing disruption without development. They are going through social upheavals as people move from farms to cities but without accompanying agricultural or industrial revolutions. Services, where ever more Africans find work, are less productive than in any other region—and barely more productive than in 2010. Poor infrastructure does not help. For all the talk of using digital technology and clean energy to leapfrog ahead, Africa lacks the 20th-century kit needed to thrive in the 21st. Its road density has probably fallen. Less than 4% of farmland is irrigated and almost half of sub-Saharan Africans lack electricity..The problem also has another, under-appreciated, dimension. Africa is a corporate desert. In the past 20 years Brazil has spawned fintech giants and Indonesia e-commerce stars, while India has incubated one of the world's most vibrant corporate ecosystems. But not Africa. It has fewer firms with at least $1bn in revenues than any other region and since 2015 the number looks to have declined. The problem is not risk so much as the fragmented and complex markets created by all the continent's borders. For investors, Africa's balkanised stock exchanges are an afterthought. Africa accounts for 3% of world GDP, but attracts less than 1% of its private capital..Read more: 🔒 The Economist: Africa's crossroads: progress, challenges, and potential.What should Africa's leaders do? A starting-point is to ditch decades of bad ideas. These range from mimicking the worst of Chinese state capitalism, whose shortcomings are on full display, to defeatism over the future of manufacturing in the age of automation, to copying and pasting proposals by World Bank technocrats. The earnest advice of American billionaires on micro-policies, from deploying mosquito nets to designing solar panels, is welcome but no substitute for creating the conditions that would allow African businesses to thrive and expand. There is a dangerous strand of development thinking that suggests growth cannot alleviate poverty or does not matter at all, so long as there are efforts to curb disease, feed children and mitigate extreme weather. In fact in almost all circumstances faster growth is the best way to cut poverty and ensure that countries have the resources to deal with climate change..So African leaders should get serious about growth. They should embrace the self-confident spirit of modernisation seen in East Asia in the 20th century, and today in India and elsewhere. A few African countries such as Botswana, Ethiopia and Mauritius have at different times struck what Stefan Dercon, a scholar, calls "development bargains": a tacit pact among the elite that politics is about increasing the size of the economy, not just a fight to divvy up who gets what. More of those elite deals are needed..At the same time governments should build a political consensus in favour of growth. The good news is that powerful constituencies are keen on economic dynamism. A new generation of Africans, born several decades after independence, care a lot more about their careers than they do about colonialism..Narrowing the Africa gap calls for new social attitudes towards business, similar to those that unleashed growth in China and India. Instead of fetishising government jobs or small enterprises, Africans could do with more risk-taking tycoons. Individual countries need much more infrastructure, from ports to power, more free-wheeling competition and vastly better schools..Another essential task is to integrate African markets so that firms can achieve greater economies of scale and attain an absolute size big enough to attract global investors. That means advancing plans for visa-free travel areas, integrating capital markets, plugging together data networks and finally realising the dream of a pan-African free-trade area..Free to get rich.The consequences for Africa of simply carrying on as usual would be dire. If the Africa gap gets bigger, Africans will make up nearly all of the world's very poor, including the most vulnerable to climate change. That would be a moral disaster. It would also, through migration flows and political volatility, threaten the stability of the rest of the world..But there is no reason to catastrophise or give up hope. If other continents can prosper, so can Africa. It is time its leaders discovered a sense of ambition and optimism. Africa does not require saving. It needs less paternalism, complacency and corruption—and more capitalism..Read also:.🔒 The Economist: Africa's crossroads: progress, challenges, and potential🔒 Best of 2024: FT – Oil boom or bust? Namibia's offshore wells defy the oddsCathy Buckle: The Ghost Bird and the bizarre back-pocket

The Economist: Africa must embrace its least fashionable idea – a capitalist revolution

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