What, Realistically, Can Be Done for Africa? Part II

Continued from Part I.

The effects of colonialism in Africa

Mr. Matthews devotes much space to refuting the notion that Western prosperity derives from either the slave trade or the extraction of resources under colonialism. Slavery enriched a few individuals but made only a negligible contribution to the economic growth of Western nations. Such growth was fueled instead by domestic industries, technological innovation, and intra-European trade.

Europe’s colonies were “at best, a marginal supplement, and at worst, a costly distraction” for their mother countries. Military defense, infrastructure projects, bureaucrat salaries, and subsidies to colonial economies all siphoned off money from the national economy. One study of Britain’s West Indian colonies in the late 18th century found that they represented a net loss of over one million pounds sterling per year — equivalent to more than 10 percent of Britain’s annual tax revenue. The author concludes that “the British Empire was a prestige project disguised as economic strategy.” He offers similar analyses for the colonial empires of Spain, France, the Netherlands, Portugal, Italy and Germany. This section of the book constitutes a devastating refutation of the resentment-fueled thesis that Western wealth derives principally from the exploitation of the Third World. We pass over it lightly, however, to focus instead on what Mr. Matthews can teach us about Africa.

His principal message is that Africans’ temporary loss of political sovereignty did not mean that they were reduced to passivity: “The economic history of colonial Africa is routinely misrepresented as a simple morality tale of dependency, in which development descends from above, bestowed by European planners upon inert local populations.” In reality, Africans were active participants in their own history during the entire period, responding in their own ways to the changes brought by Europeans. The colonizers built many roads, for example, to transport the goods they extracted, but the local population was quick to take advantage of these to expand indigenous commercial networks:

In many regions, African middlemen retained substantial control over the circulation of goods, credit, and information, especially where colonial administrations lacked the manpower, local knowledge, or institutional capacity to impose comprehensive control. These traders were not passive go-betweens. They were innovators who adapted financial practices, experimented with systems of credit and trust, and reshaped kinship networks to serve modern commercial objectives. Far from displacing African commerce, colonial infrastructure frequently amplified it, enhancing existing capabilities rather than suppressing them.

African laborers as well, though no doubt often poorly treated,

defied the caricature of the coerced and helpless colonial subject. In mining, manufacturing, and transport, many Africans entered wage labor voluntarily, motivated by the prospect of higher incomes or improved life chances, even as others resisted oppressive practices. Labor mobility reflected rational economic calculation. Workers assessed risks, rewards, and opportunities in their pursuit of advancement. African workers formed unions, organized strikes, and developed new forms of collective bargaining to improve conditions.

The growth of the cocoa trade in the Gold Coast, now Ghana, is an instructive example of a highly successful industry that grew up during the colonial period due entirely to African initiative and contrary to the intentions of the British administration:

Ghana’s rise as a global cocoa powerhouse can be traced to a single African entrepreneur, Tetteh Quarshie, a blacksmith who travelled to Fernando Po, now Bioko, in the 1870s. While working there, he acquired cocoa pods and smuggled them back to the Akwapim hills in the eastern Gold Coast. His initial experiments succeeded, and local farmers quickly recognised cocoa’s extraordinary potential as a cash crop. By 1911, the Gold Coast had become the world’s largest cocoa exporter, driven overwhelmingly by African smallholders.

Native farmers developed flexible land tenure arrangements that allowed the participation of migrants from neighboring regions, “decentralising risk and vastly expanding the labour pool.” African cultivators

protected young cocoa trees by intercropping them with plantains and other fast-growing crops. These provided shade, improved survival rates, and generated interim income, an elegant indigenous solution to the problem of delayed returns. Farmers shared planting material informally, selecting pods from high yielding trees and practising selective propagation, [and] employed organic pest control methods to combat diseases. Where colonial infrastructure was inadequate, cocoa producers acted. They built roads, hired porters, pooled resources for carts, and eventually purchased trucks. These initiatives enabled them to move cocoa to ports and negotiate prices directly, often bypassing European intermediaries altogether.

What makes the Ghanaian cocoa story so deeply embarrassing for the standard colonial narrative [of African passivity] is that African smallholders did not merely participate in the cocoa economy but decisively outperformed European firms. European companies repeatedly attempted to establish large-scale plantations and failed. Their operations were plagued by high fixed costs, chronic labor shortages, and ignorance of local ecological and social conditions. The European model proved inefficient and brittle when transplanted into West African realities.

Perhaps the clearest illustration of African economic agency is the cocoa hold-up of 1937–38. Confronted with falling world prices and blatant collusion among European firms to fix cocoa prices at artificially low levels, Ghanaian farmers responded with collective action: [they] convened mass meetings, circulated leaflets, and organized cocoa depots to regulate supply. The boycott severely disrupted the colonial economy and compelled the British administration to reassess its relationship with African producers. [It] demonstrated that African farmers were not helpless victims of colonial capitalism but strategic actors capable of disciplined, collective economic resistance.

The cocoa industry remains important to the contemporary economy of Ghana as well as its neighbor the Ivory Coast, and the colonial administration’s contribution did not extend beyond importing the first pods.

The author summarizes the overall legacy of colonialism as follows:

The economic history of colonial Africa is far more intricate than the dominant extraction narrative suggests. While European powers undoubtedly sought to maximize their benefits, structural economic developments — rising wages, infrastructure investments, and evolving labor policies — produced tangible economic gains. Rather than simply depleting resources, colonial rule fostered growth that, in several instances, exceeded that of contemporary Asian economies.

Remittances will not make Africa prosperous

Africa’s economic trajectory since the end of the colonial era has been disappointing, and many Africans have sought prosperity elsewhere. Over one million people now leave the continent every year. Often, they send remittances to family members back home; in 2023 these totaled over $100 billion. Some observers expect this wealth to fuel future development, but Mr. Matthews produces plenty of evidence to show that such hopes are misguided.

Firstly, emigrants are not a random cross-section of the African population:

Many of those who choose to make the leap tend to be among their countries’ best and brightest. They’re more likely to be multilingual and possess a tertiary education for instance. From master craftworkers and entrepreneurs to doctors, nurses, educators, and technology specialists . . . the sustained exodus of Africa’s most skilled [and] ambitious individuals continues to deprive the continent of the human capital essential for its development.

Furthermore, the considerable money from remittances tends not to be used wisely:

Rather than fueling productive investment or industrial development, remittances tend to finance the consumption of imported goods and services. This pattern deepens dependency on external markets and hinders the emergence of local industries — ultimately reinforcing the very underdevelopment migration was meant to escape.

Remittances artificially inflate the value of local currencies, cheapening imports. This makes it difficult for local producers to compete. The money may permit poor families to keep their heads above water from month to month, but teaching them to swim on their own would do more long-term good: “remittances create a chain of dependence between the sender and the recipient. As family members grow more reliant on the money, the decisions required to secure self-sufficiency are delayed.” Some prefer living on remittances to working. Others spend the money on conspicuous consumption or gifts and favors meant to sustain social networks and increase personal prestige.

Countries where remittances make up a large part of GDP, over 20 percent in some cases, are among the poorest in Africa. Conversely, the most successful countries on the continent rank well below the average in their reliance on remittances. Mr. Matthews concludes that “African policymakers should temper their enthusiasm for remittances and focus instead on building domestic productive capacity, strengthening institutions, and investing in education and infrastructure.”

Foreign aid has harmed Africa

Africa has received over $500 billion in foreign aid since 1960; adjusting for inflation, that amounts to between two and three trillion of today’s dollars. But it would be an understatement merely to say that this money has been wasted: It has done measurable harm. One study of the period 1975–1998 showed that a 1 percent increase in aid as a share of GDP was associated with a 3.65 percent reduction in annual real GDP per capita growth. The impact on industrial employment is particularly damaging, with evidence showing a consistent decline in jobs as aid flows increase.

The more a country fails, the more help it receives, and the less incentive it has to change. Donors remain committed to disbursing funds, aid agencies celebrate process over outcomes, and recipient governments learn to game the system.

Moreover, providing governments with resources independent of domestic taxation reduces leaders’ accountability to citizens. When taxpayers observe that public services and salaries are funded primarily by foreign aid, the motivation to comply with tax obligations weakens. In Malawi, this has contributed to widespread tax evasion.

Although aid programs do harm overall, they remain a source of enrichment for individuals. International organizations such as the World Bank, the United Nations Development Programme (UNDP), and UNICEF are some of the most desirable employers on the continent. Accordingly, every year many of Africa’s best and brightest go to work for them. Others start charities to attract the money such organizations disburse. Such people are thus lost to the productive economy.

Mr. Matthews notes that foreign aid does not do harm always and everywhere. The example of South Korea proves that, properly managed, it can foster long-term economic development. Aid accounted for over 50 percent of that country’s imports in the years following the Korean War, supporting critical sectors such as education, transportation, agriculture, and energy. The Korean government maintained strong control over the allocation and coordination of aid resources, integrating them into national development plans and using them productively to finance public investment and facilitate industrial upgrading. Once the country achieved a degree of macroeconomic stability and export competitiveness in the 1970s, it voluntarily reduced its reliance on aid. In part, this is because the government observed how the large volume of American food aid in the 1950s had disincentivized local agriculture.

If aid is ever to do more good than harm in Africa, it will have to operate within a framework that prioritizes accountability, local ownership, and institutional reform, targeting growth-producing sectors and developing native African capacities rather than building substitutes for them.

Abundant natural resources do not determine prosperity

There is no necessary connection between national prosperity and an abundance of natural resources. Japan and Switzerland are examples of countries that have prospered without natural endowments. On the other hand,

in contexts where institutions are weak, the presence of valuable resources often creates perverse incentives. Resource wealth tends to fuel rent-seeking behavior, as political elites and connected interest groups compete to capture resource revenues.

Africa is unusually rich in natural resources, but this has yet to translate into widespread prosperity because elites have diverted revenue into offshore accounts and prestige projects instead of reinvesting it in education, infrastructure, or industrialization. Nigeria, for example, is Africa’s largest oil producer, earning $300 billion from oil exports between 1990 and 2015, but more than 40 percent of Nigerians live below the poverty line. In 2014, fully $20 billion in oil revenue went missing.

Countries that process their own natural resources have greater prosperity than those that merely export them as raw materials:

At present, many African countries export mostly unprocessed raw materials like minerals, crude oil, and agricultural products. These materials are shipped to countries with more developed and energy-intensive industries, where they are refined and turned into finished goods. These goods are then sold back to African markets at significantly higher prices. Because Africa lacks the energy infrastructure needed to support local processing and manufacturing, it misses out on adding value to its own resources and capturing more of the profits from those goods.

Botswana is an example of an African nation that has managed its natural resources well:

From the 1980s, the country maintained an impressive average annual growth rate of 7.8%, with approximately 40% of this growth attributable to mining. Crucially, Botswana paired its mineral wealth with prudent macroeconomic management, transparent governance, and a clear long-term development strategy. Institutions were built to safeguard public revenues, and policies ensured that rents were invested in education, health, and infrastructure rather than lost to corruption or political patronage. As a result, Botswana’s governance indicators, such as control of corruption and regulatory quality, consistently outperformed regional averages and aligned closely with those of high-income countries​​.

Immigration, not emigration

Mr. Matthews believes Africa would benefit more from immigration than emigration:

Rather than viewing migration only as a way for individuals from the Global South to escape poverty, we must begin to see immigration as a strategic tool for transferring expertise, institutional norms, and entrepreneurial dynamism. Africa’s youthful population lacks mentors and models of successful enterprise. Skilled immigrants can transfer knowledge, bring managerial expertise, and establish businesses that train locals in world-class practices. Foreign companies, if integrated wisely, can create value chains that expand local capabilities.

Africa is in an enviable position when it comes to attracting value-adding migrants. Land is comparatively cheap and undeveloped, leaving more room and opportunities for people arriving from richer parts of the world to instigate growth and activity. [The continent is] abundant in natural resources and minerals, along with biodiversity. More humans ready to work should be welcomed to put unused land and insufficiently exploited resources to use.

African governments could also encourage companies to pair immigrant workers with local apprentices, ensuring that knowledge transfer accompanies foreign investment. Companies that sponsor apprenticeships or partner with local universities and research organizations could be rewarded with tax breaks.

Widespread corruption is one reason foreign entrepreneurs are reluctant to invest, but Singapore has demonstrated a possible way of getting around this problem: specialized business courts with international jurisdiction applying internationally recognized legal standards. “To reinforce credibility,” Mr. Matthews explains, “all cases and outcomes could be tracked through public dashboards, allowing entrepreneurs and investors to monitor progress and verify fairness.” This would create a predictable legal environment in which commercial disputes are resolved swiftly and transparently.

The author notes that immigrant entrepreneurs, and not only from the West, have played a positive role in many African economies already. Examples include the Lebanese in Nigeria and Indians in Uganda. (In the latter case, Idi Amin famously expelled the highly productive Indians, causing Ugandan wages to collapse by 90 percent.)

Knowledgeable immigrants could help overcome cultural constraints on entrepreneurship in Africa itself. One of these is an envy-driven superstition that attributes personal prosperity to black magic:

Sudden or conspicuous economic success is interpreted not as a result of hard work or ingenuity, but as evidence of occult manipulation. Entrepreneurs who rise too quickly or display material wealth risk being accused of using malevolent spiritual forces to harm others or steal their good fortune.

Another constraint is the expectation of redistribution within kinship and tribal networks:

In many African villages, a business owner who begins to accumulate wealth is expected to provide jobs, loans, and gifts to kin and neighbors. Due to the intense pressure to redistribute income, even at the cost of their own ventures’ sustainability, entrepreneurs resort to limiting business investments or hiding income to evade persistent demands for support from kin and neighbors.

African emigrants could also contribute to development in more effective ways than by sending remittances:

Skilled migrants and students studying abroad, equipped with international expertise, exposure to high-performing industries, and diverse professional networks, are uniquely positioned to bridge the gap between global knowledge and local application. One of the most effective ways they can contribute is by creating a relationship with a local firm — offering mentorship, sharing strategic insight, or providing technical guidance — even without physically returning to the continent. This does not require full-time employment. A monthly strategy call, a shared resource hub, or a remote mentorship program can have significant impact. For this to work, however, governments must rethink current policies. In many countries, students who receive government scholarships are bonded to public service roles upon returning.

The moral roots of corruption

Corruption is extremely widespread in Africa, and rooted in its group-oriented culture:

At the heart of many African societies lies a collectivist orientation. Individuals are socialized from childhood to prioritize group cohesion, familial loyalty, and clan affiliation over personal autonomy or abstract principles like impartial justice. This mindset, though historically adaptive, becomes corrosive in the context of modern bureaucratic governance. When group interests take precedence over neutral rule-following, public office turns into a platform for redistributing resources to kin and community rather than serving the common good. . . . Whistleblowing, in particular, is frowned upon in collectivist cultures.

In such a society, nepotism may be considered a duty: “An official who refuses to help relatives is seen as arrogant or ungrateful.” The author also notes that “in many African settings, it is considered improper — even offensive — to refuse a gift from someone to whom a favor was extended.” Bribery is thus not only tolerated but morally rationalized. An African official who hires a fellow-tribesman or accepts a gift in exchange for a favorable decision may sincerely believe he has acted rightly, failing to grasp how such actions corrupt the institutions of which he is a part. The low average intelligence of Africans involves a lack of long-term thinking. Many Africans quite simply cannot understand the cumulative effect of favoritism and bribery in eroding public finances and undermining the provision of public goods such as medicine, education, and infrastructure. They easily see the immediate personal gain, while the future loss to society remains abstract and unreal.

Mr. Matthews cautions us against seeing corruption as the chief barrier to economic development in Africa, however. Many East Asian societies have achieved dramatic growth despite widespread corruption.

Corruption in East Asia is typically centralized or organized, often monopolized by the ruling elite or single-party apparatus. This kind of corruption — while morally objectionable — introduces less uncertainty to the business environment. Investors know which palms to grease and can generally expect a stable return on their investment once the transaction is complete. Centralized corruption allows for more efficient transactions compared to decentralized systems in which numerous actors extort bribes independently and arbitrarily.

African corruption is mostly of the latter sort. Many African nations suffer from overly complex regulations and bloated bureaucracies. Anyone wanting to invest in Nigeria’s oil or gas sector, for example, must deal with over 20 different government agencies before he can begin operations, and a bribe may be required at any stage. Across the continent, “getting a business license, importing goods, acquiring land, or even accessing basic government services often involves navigating a gauntlet of permissions, clearances, and approvals.” In such an environment, bribery may become a necessary survival strategy:

Corruption is not merely a moral failing but a rational response to systems that reward rent-seeking over productivity. When officials have wide discretion to allocate resources, approve licenses, or regulate industries, bribes become inevitable. By contrast, when economies are liberalized, competition reduces opportunities for corruption, while transparency and accountability become more feasible. Thus, the path to reducing corruption is not endless moral crusades but structural reforms that expand economic freedom.

Deeper cultural changes will also be necessary:

Education, both formal and informal, must elevate values that align with public interest. Children should be taught that fairness, transparency, and rule-following are not Western impositions but universal ideals necessary for collective progress. Instead of glorifying officials who share resources with their clans, communities should celebrate those who serve the national interest and uphold [impartial] ethical standards. The stigma attached to whistleblowing must be reversed, turning it into a mark of courage and integrity.

[Africa] is a land of enormous potential — home to the world’s fastest-growing populations, burgeoning tech hubs, and rich natural resources. Tapping into this potential requires cutting down the number of agencies that businesses must interact with, establishing clear, predictable rules that apply to everyone [and] empowering watchdog institutions, the press, and civil society to hold power to account. And it [requires] unlocking the power of markets. When businesses can operate freely, when competition thrives, and when innovation is rewarded, corruption becomes harder to justify — and easier to punish.

Conclusion

The author has harsh words for those pushing “clean energy” on Africa:

[denying] Africa fossil fuel development in favor of an exclusive focus on renewables amounts to a new form of energy colonialism. Wealthy nations that built their economies on coal and oil now dictate to poorer countries what forms of energy they are allowed to use — often under the banner of climate justice. Yet Africa’s contribution to CO₂ emissions is minimal: the idea that African gas projects threaten global climate targets is absurd. Far more harmful is the insistence that African countries abandon the very tools that lifted the West out of poverty.

Many have attributed Africa’s problems to poor leadership, and there is undeniably much truth in this. But Mr. Matthews notes that good leaders have also emerged without receiving comparable attention. In recent years, these have included Ellen Johnson Sirleaf, President of Liberia from 2006 to 2018. Faced with the difficult challenge of rebuilding her country after a civil war, she made primary school education free and compulsory for all children, passed into law a pioneering Freedom of Information Act, and presided over a booming economy.

Another is Mwai Kibaki, President of Kenya from 2002 to 2013. He established

Kenya’s path towards a multi-party democracy after nearly 40 years of one-party rule. Over the course of 10 years, the number of Kenyans with access to electricity more than doubled. Investments in education across the board spawned a population known the world over for their advanced English language skills and IT literacy. This created the springboard for tech giants such as Safaricom and Kilimall to launch.

Observers have begun referring to these successful Kenyan enterprises as the “Silicon Savannah.”

Many consider President Kibaki’s most important achievement to be passing Kenya’s 2010 Constitution:

The constitution recognized and protected important human rights and freedoms; its sections on media and press freedoms have enabled a thriving, private-sector led news and publishing space. Decentralization of powers from central government to regional counties, and a more equitable distribution of budgetary resources between these two layers of government has promoted healthy competition and innovation amongst county governors and regions.

Mr. Matthews clearly deserves much credit for writing perhaps the first book on African economic challenges to embody a realistic understanding of the importance of cognitive ability:

For Africa, where average IQ scores remain significantly below global averages, the challenge is therefore twofold: improving nutrition, education, and healthcare to raise raw cognitive potential, while also cultivating cultural values that reward disciplined thinking and long-term planning. Without this transformation, Africa will remain trapped in a cycle where short-termism, corruption, and dependency cripple long-term growth.

Mr. Matthews understands that because Africa has a rather small “smart fraction,” identifying, cultivating, and optimally deploying it will be of the greatest importance. Yet it often seemed to me in reading Busting African Delusions that this material was imperfectly integrated with the rest of his discussion, which sometimes reads like a wish list of all the things the author would ideally like to see this smart fraction accomplish. No matter how select a group we define as constituting Africa’s “smart fraction,” there are only 24 hours in the day, and there will be limits on what they can achieve. Mr. Matthews’ plans will put a lot of responsibility on a relatively small number of shoulders. But he is largely correct about what African priorities should be.