This kind of perspective which disaggregates the “monolith” has been needed for a very long time and it’ll be nice to see how your attempt delivers over time!
I will follow your articles with interest. More than shedding light on the divers realities of a whole continent, seeing how different politics affected countries, with similar potential, in different directions is very interesting.
Wonderful review! As someone who enjoys Economics Explained videos, I'm glad you're calling attention to the obvious flaws in treating Africa like a monolith. I'm curious, have you written anything about Kenya? I'd love to hear your take on its economy.
This is really informative! How do you do research for this newsletter? I'm a Kenyan trying to understand this continent better but I'm not sure where to start.
If you are trying to learn about the continent better read my underlined articles about each country and go thru my archive . You'll gain a lot out of it!
As for my research, I think my thought process is all over the place. So I am not sure how helpful i'll be.
But generally I do a couple things:
1. Speak to people who live in that country (the African whatsapp chat from my alma mater has been great help).
2. Travel there if possible
3. Watch Youtube videos about the country
4. Read a book or two about the economic/geopolitical history and try to go indepth about each President and seperate rhetoric from actions
"By the way, the countries are classified by average incomes. By definition, the average can be affected by skewing due to income inequality. There are many countries who are labelled as “X income” despite having health standards that are lower or higher than its reported income level."
But yes, I mention the high unemployment rates of some of these countries . Botswana and Namibia also have absurdly high unemployment.
But yea, again I am just using the World Bank definitions even though I point out how skewed it is.
I'm curious what you have to say about the effect on development of US sanctions and IMF-imposed structural adjustment policies. "Communism" usually seldom fails in a vacuum.
#2 IMF structural adjustment policies were disasters, but people mistake those programs as a "cause" of pain instead of a treatment. The IMF is like a fire fighter who puts out the fighter (although in a terrible way), but they don't cause the fire.
The structural adjustment programs, came as a result of a global commodity bust when prices like gold, copper, etc. fell hard in the 1980s due to Western nations and Japan were in a recession in the 1980s. When the Western & Japanese firms were struggling and going bankrupt, those firms - the commodity buyers - weren't buying as much and international commodity prices fell.
If you are curious you can see the price collapses of gold, cocoa, and copper in the 1980s here:
Many African countries in the 60s, 70s, and 80s basically depend on high commodity prices to fund their programs and governments. When cocoa/copper/oil/gold prices were high, many African countries (that weren't on the CFA-franc), kept an artificially high currency to make food imports cheap, they had many state owned enterprises that acted as an employment absorber that paid really good pensions and salaries, had food and fuel consumption subsidies, and were able to invest in infrastructure, healthcare, and roads.
Growth was decent in the 60s and 70s. But when the commodity bust occurred in the 80s, African countries were selling their foreign reserves to keep the artifically high currency, and the money to subsidize state owned enterprises ran out. When the country defaulted on an interest payment or running out of reserves, that's when the IMF came in.
People who don't know any better will point to the IMF SAPs in the 80s and say they caused the problem. But when you actually look at the balance sheets or what the ministers were saying in the 80s, they looked to the IMF because they were already in a problem.
The IMF then came in and says "stop wasting reserves on subsidizing consumption and let your currency float", "stop artificially making food and fuel cheap", "cut pensions and government salaries" and "sell your bankrupt state owned enterprises to investors". Then Africans rightly get angry,riot, and the military might do a coup. While I have deep sympathy for the struggling Africans who suffer under IMF loans, its just a mathematical reality that the government was providing an artificially high standard of living that the citizenry couldn't afford.
The thing is many African governments will only half listen or just change the reforms after few years. That's why my home country Ghana has done 17 IMF Loans. When I write about Ghana I'll talk extensively about this.
It took until the 2000s for the prices to come back again mainly due to the rapid economic growth of China
Not sure if I agree with you that "communism" seldom fails in a vacuum. I would say that's specifically communism's issue. It's not as flexible enough to deal with macroeconomic issues the same way market economies are. When Reagan told the Saudis to lower oil prices, that helped crush the Soviets the 80s, while Canada, another petro state, because its a market economy didn't split into 15 separate countries like the USSR did.
When it comes to successful communist states, China and Vietnam have managed to be successful due to implementing market reforms under Deng and the Doi Moi reforms in Vietnam. Seychelles was also a relatively successful socialist/communist state which you can read more in my article on Seychelles. (Although now Seychelles is a mixed economy).
However there are specific communist/communist leaning policies that were terrible in Africa:
A. The price control policies were a disaster in African countries that used them. In Ghana, Nkrumah squeezed the cocoa farmers out of so much money as his state owned marketing board would pay the farmers minimally as most of the profits went to the government to fund Dams, bridges, and roads. The result was cocoa production stagnated and cocoa farmers would go to Ivory Coast to sell for higher prices. (My Grandfather was one of those farmers!)/ Same issue existed in Guinea, when Toure's police force beat the shit out of market women for selling produce at market prices.
B. Collectivized farming was a disaster in Communist Ethiopia, Mozambique, and Angola. Yields were terrible and Mozambique and Ethiopia were suffering from famine. You can say "yields were down because of the civil war" but even in the plots of land that Mozambique and Angola protected yields still decreased.
For Ethiopia its only when they swithced their polcies from collectivized farming to private household lots (still owned by the state though) and the unleashing of their agricultural commodity market, is when Ethiopian food yields started to take off in the 2000s from one of the worst in Africa to one of the best.
C. Government owned firms have been black boxes of corruption across Africa. Nigeria with the state owned steel and shipping, Ghana with its state owned firms, and etc. Government ministers just stole money from them. I am not opposed to state owned industry, but the ideological rigidity of it was terrible. When IMF told Nigeria to sell state owned assets, which created the business tycoon Dangote, at least he was able to increase cement production which the state owned Nigerian firms couldn't do. Nigeria's state owned refineries stopped working, but at least Dangote was able to make a refinery.
These are really good questions and I am happy to answer.
#1 For sanctions you need to go country by country. Not all African countries are sanctioned. Most sanctions are just arms embargoes, freezing of dollar denominated assets of government officials, and visa bans. A perfect example is Zimbabwe. Zimbabwe's first sanctions took place by US and EU after Mugabe expropriated land from whites. Mugabe used to blame sanctions for economic decline. But the truth was the decline happened before the sanctions were put in place and there was never a trade ban so Zimbabwe could still import fertilizer. The issue with Zimbabwe's land exapprioriton was that the new land owning blacks were never trained by the whites in modern agriculture so the farming productivity tumbled after.
Also Zimbabwe was never stopped from using the dollar... As the nation dollarized its economy.
It seems there is much nuance in the success of state-owned and privately-owned industries and the specific reasons for each countries' underdevelopment. The only narratives you tend to hear are either "Africa is underdeveloped because of insane corruption" or "Africa is underdeveloped because of SAPs from the IMF". I've just subscribed to your channel, so I'll go through and read some of your more in depth analysis you've done of specific countries. No one else seems to be doing this, so thank you!
This kind of perspective which disaggregates the “monolith” has been needed for a very long time and it’ll be nice to see how your attempt delivers over time!
I will follow your articles with interest. More than shedding light on the divers realities of a whole continent, seeing how different politics affected countries, with similar potential, in different directions is very interesting.
Wonderful review! As someone who enjoys Economics Explained videos, I'm glad you're calling attention to the obvious flaws in treating Africa like a monolith. I'm curious, have you written anything about Kenya? I'd love to hear your take on its economy.
I have an article on Kenyan international borrowing which you can read here:
https://yawboadu.substack.com/p/how-african-countries-borrow-kenya
As for the "Economic & Geopolitical History of Kenya". I'm working on it, but it will take a while until it is complete.
This is really informative! How do you do research for this newsletter? I'm a Kenyan trying to understand this continent better but I'm not sure where to start.
Hi!
If you are trying to learn about the continent better read my underlined articles about each country and go thru my archive . You'll gain a lot out of it!
As for my research, I think my thought process is all over the place. So I am not sure how helpful i'll be.
But generally I do a couple things:
1. Speak to people who live in that country (the African whatsapp chat from my alma mater has been great help).
2. Travel there if possible
3. Watch Youtube videos about the country
4. Read a book or two about the economic/geopolitical history and try to go indepth about each President and seperate rhetoric from actions
5. Look at World Bank data:
https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=TD
For incomes per capita, FDI, current account info
Exports data: https://oec.world/en/profile/country/ken
6. Read NYT/Al Jazeera/African news/BBC/Financial Times/Reuters/AP/Bloomberg
articles and get import info to make a narrative about recent info.
Thanks!
Half of South Africa is unemployed, so I don't consider us to be "upper-middle income countries".
Haha I didn't write about South Africa yet.
It's gonna be a 4 or 5 parter.
But again as I wrote here:
"By the way, the countries are classified by average incomes. By definition, the average can be affected by skewing due to income inequality. There are many countries who are labelled as “X income” despite having health standards that are lower or higher than its reported income level."
But yes, I mention the high unemployment rates of some of these countries . Botswana and Namibia also have absurdly high unemployment.
But yea, again I am just using the World Bank definitions even though I point out how skewed it is.
Hey, I'm just standing up for inequality :)
I'm curious what you have to say about the effect on development of US sanctions and IMF-imposed structural adjustment policies. "Communism" usually seldom fails in a vacuum.
#2 IMF structural adjustment policies were disasters, but people mistake those programs as a "cause" of pain instead of a treatment. The IMF is like a fire fighter who puts out the fighter (although in a terrible way), but they don't cause the fire.
The structural adjustment programs, came as a result of a global commodity bust when prices like gold, copper, etc. fell hard in the 1980s due to Western nations and Japan were in a recession in the 1980s. When the Western & Japanese firms were struggling and going bankrupt, those firms - the commodity buyers - weren't buying as much and international commodity prices fell.
If you are curious you can see the price collapses of gold, cocoa, and copper in the 1980s here:
Gold: https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
Cocoa: https://tradingeconomics.com/commodity/cocoa
Crude oil: https://www.macrotrends.net/1369/crude-oil-price-history-chart
Copper: https://www.macrotrends.net/1476/copper-prices-historical-chart-data
Many African countries in the 60s, 70s, and 80s basically depend on high commodity prices to fund their programs and governments. When cocoa/copper/oil/gold prices were high, many African countries (that weren't on the CFA-franc), kept an artificially high currency to make food imports cheap, they had many state owned enterprises that acted as an employment absorber that paid really good pensions and salaries, had food and fuel consumption subsidies, and were able to invest in infrastructure, healthcare, and roads.
Growth was decent in the 60s and 70s. But when the commodity bust occurred in the 80s, African countries were selling their foreign reserves to keep the artifically high currency, and the money to subsidize state owned enterprises ran out. When the country defaulted on an interest payment or running out of reserves, that's when the IMF came in.
People who don't know any better will point to the IMF SAPs in the 80s and say they caused the problem. But when you actually look at the balance sheets or what the ministers were saying in the 80s, they looked to the IMF because they were already in a problem.
The IMF then came in and says "stop wasting reserves on subsidizing consumption and let your currency float", "stop artificially making food and fuel cheap", "cut pensions and government salaries" and "sell your bankrupt state owned enterprises to investors". Then Africans rightly get angry,riot, and the military might do a coup. While I have deep sympathy for the struggling Africans who suffer under IMF loans, its just a mathematical reality that the government was providing an artificially high standard of living that the citizenry couldn't afford.
The thing is many African governments will only half listen or just change the reforms after few years. That's why my home country Ghana has done 17 IMF Loans. When I write about Ghana I'll talk extensively about this.
It took until the 2000s for the prices to come back again mainly due to the rapid economic growth of China
#3
Not sure if I agree with you that "communism" seldom fails in a vacuum. I would say that's specifically communism's issue. It's not as flexible enough to deal with macroeconomic issues the same way market economies are. When Reagan told the Saudis to lower oil prices, that helped crush the Soviets the 80s, while Canada, another petro state, because its a market economy didn't split into 15 separate countries like the USSR did.
When it comes to successful communist states, China and Vietnam have managed to be successful due to implementing market reforms under Deng and the Doi Moi reforms in Vietnam. Seychelles was also a relatively successful socialist/communist state which you can read more in my article on Seychelles. (Although now Seychelles is a mixed economy).
However there are specific communist/communist leaning policies that were terrible in Africa:
A. The price control policies were a disaster in African countries that used them. In Ghana, Nkrumah squeezed the cocoa farmers out of so much money as his state owned marketing board would pay the farmers minimally as most of the profits went to the government to fund Dams, bridges, and roads. The result was cocoa production stagnated and cocoa farmers would go to Ivory Coast to sell for higher prices. (My Grandfather was one of those farmers!)/ Same issue existed in Guinea, when Toure's police force beat the shit out of market women for selling produce at market prices.
B. Collectivized farming was a disaster in Communist Ethiopia, Mozambique, and Angola. Yields were terrible and Mozambique and Ethiopia were suffering from famine. You can say "yields were down because of the civil war" but even in the plots of land that Mozambique and Angola protected yields still decreased.
For Ethiopia its only when they swithced their polcies from collectivized farming to private household lots (still owned by the state though) and the unleashing of their agricultural commodity market, is when Ethiopian food yields started to take off in the 2000s from one of the worst in Africa to one of the best.
C. Government owned firms have been black boxes of corruption across Africa. Nigeria with the state owned steel and shipping, Ghana with its state owned firms, and etc. Government ministers just stole money from them. I am not opposed to state owned industry, but the ideological rigidity of it was terrible. When IMF told Nigeria to sell state owned assets, which created the business tycoon Dangote, at least he was able to increase cement production which the state owned Nigerian firms couldn't do. Nigeria's state owned refineries stopped working, but at least Dangote was able to make a refinery.
These are really good questions and I am happy to answer.
#1 For sanctions you need to go country by country. Not all African countries are sanctioned. Most sanctions are just arms embargoes, freezing of dollar denominated assets of government officials, and visa bans. A perfect example is Zimbabwe. Zimbabwe's first sanctions took place by US and EU after Mugabe expropriated land from whites. Mugabe used to blame sanctions for economic decline. But the truth was the decline happened before the sanctions were put in place and there was never a trade ban so Zimbabwe could still import fertilizer. The issue with Zimbabwe's land exapprioriton was that the new land owning blacks were never trained by the whites in modern agriculture so the farming productivity tumbled after.
Also Zimbabwe was never stopped from using the dollar... As the nation dollarized its economy.
This is going to be a long answer to please indulge me as I split it into different parts.
Thank you for the very detailed response!
It seems there is much nuance in the success of state-owned and privately-owned industries and the specific reasons for each countries' underdevelopment. The only narratives you tend to hear are either "Africa is underdeveloped because of insane corruption" or "Africa is underdeveloped because of SAPs from the IMF". I've just subscribed to your channel, so I'll go through and read some of your more in depth analysis you've done of specific countries. No one else seems to be doing this, so thank you!