July 8, 2026 | Podcast
Subscribe Now
Want the latest insights on the economy and other forces shaping the investment landscape?
Subscribe to our Investing Insights newsletter.
Investments
ASSET-CLASS CAPABILITIES
Insights
EDUCATION CENTER
SUBSCRIBE
Africa’s growth story has long been misunderstood. On this episode of The Active Share, Hugo is joined by Joe Studwell, author of How Asia Works and How Africa Works, to unpack the forces shaping Africa’s economic trajectory. Joe challenges common misconceptions about the continent’s development, arguing that agricultural productivity, population density, and education are the foundations of sustained growth. He and Hugo also discuss the complex role of China’s investment; lessons from Botswana, Mauritius, and Rwanda; and why urbanization and demographic growth could reshape Africa’s economic future.
Comments are edited excerpts from our podcast, which you can listen to in full below.
Joe Studwell: The explanations on Africa’s lack of growth in mainstream media and academia are familiar: governance failure, corruption, kleptocracy, civil and ethnic strife. But I never found them fully convincing as fundamental explanations. They felt more proximate, more like symptoms of larger issues.
What really stood out for me was the immediate post-independence period between the late 1950s through the 1960s. At the time, Africa was about one-fifth of Asia’s population density and had comparable population density to Europe in 1500, a time when there was essentially no growth.
At that level of density, development is extremely difficult. There aren’t sufficient markets or large urban centers to drive demand or generate tax revenue. Infrastructure then becomes prohibitively expensive on a per capita basis.
You also don’t get the division of labor or the kind of innovation that comes from population concentration.
What changed for Africa, however, was mid-20th century medical progress such as vaccinations, disease screening, and public health campaigns, all of which drove population growth. The continent’s population grew from about 230 million people in 1960 to 1.5 billion today, with projections of 2.5 billion by 2050 and 4 billion by the end of the century.
In addition, agricultural growth in Africa has averaged about 4.5% annually since 2000, which is the fastest in the world. And that’s exactly what you’d expect: with population doubling roughly every 25 years and food demand rising even faster, the earliest and most visible growth shows up in agriculture and downstream processing.
Joe: Africa now has nearly 40 cities with populations over 1 million; in the 1980s, it had two. Around those cities, and even in smaller ones, small farmers are increasingly using irrigation. They’re digging wells, managing their own water, and getting multiple crops a year.
But if you look at Sub-Saharan Africa, for example, average yields are still around where Asia was in 1960, or even lower. That masks what’s happening in the more concentrated parts of the continent, where the model is clearly shifting.
At the same time, food production has risen significantly, and distribution has improved, helped by extensive highway construction over the past several decades. As a result, there’s been very strong growth in agribusiness, especially in food processing.
And over the last 20 years, there’s also been a major shift toward processed foods. Where people once milled staples such as maize themselves, most now buy processed products, even in rural areas.
Joe: Yes, but it’s important to be precise about what that means. It’s not simply that colonial powers were uniquely extractive or hostile. A lot of it comes back to demographics. Population density was so low that colonial governments could raise almost no tax revenue. And without large cities, which have historically been central to taxation and state-building, there wasn’t a fiscal base.
To give a sense of scale, the two largest cities in Africa around 1900 were Lagos and Dar es Salaam; both had populations of roughly 20,000. This was largely due to communicable disease as living near others carried a high risk of death.
With such limited revenue, colonial governments couldn’t build school systems. Before the 1950s, formal education was mostly confined to mission schools, and those were few and far between. It was only in the final years before independence that colonial administrations began opening schools at all.
As a result, literacy rates across Africa were about 16%, and female literacy rates were closer to 5%. That left newly independent governments with very little human capital to work with, as a baseline level of educated citizens is necessary to run a state, let alone build a modern economy.
In 1960, Africa had comparable population density to Europe in 1500, a time when there was essentially no growth.
Joe: Colonial governments had largely governed Africa by maintaining divisions between ethnic groups. Then, almost overnight, they left and expected new leaders to form national parties and run national elections.
Take the Belgian exit from the Democratic Republic of Congo. The first election post-independence included more than 100 ethnic groups, and no party won more than 25% of the vote. In that sense, it was a setup for instability.
So, over the past 60 years, there has been a need for democracy earlier in African countries’ development compared to other regions, largely because of that same ethnic complexity. And that complexity again ties back to historically low population density.
However, that’s no longer the case. Today, democracy is more present in Africa relative to its level of development compared to elsewhere, in part because it helps manage those ethnic rivalries.
Joe: Without the Cold War, things might have looked somewhat different, but not fundamentally so. The core constraints would still have been there: low population density and low levels of education meant Africa was always going to take time to build the conditions for sustained growth.
And in that sense, it would still have been waiting to reach a critical mass of people and human capital. Even today, with a population of around 1.5 billion, the continent’s overall density remains low because Africa is so large.
Joe: African countries have often struggled with resources, in part because many of those countries were politically immature when they began developing natural resources such as minerals and hydrocarbons.
That said, there’s a common misconception that Africa is exceptionally resource rich. It isn’t, at least not in a broad sense. The perception comes from the fact that many African economies were historically narrowly concentrated in those sectors. South Africa has long been the most resource-rich country on the continent, but that’s not representative of Africa overall.
Joe: I initially thought there might be a distinct “African model,” but that doesn’t really hold up. The same broad developmental strategies have shown up in East Asia, in parts of Europe such as France, Italy, and Germany, and even in the United States during earlier periods.
Getting agriculture right early on is critical, especially for distribution. It spreads income widely and brings a large share of the population into the economy. Then, manufacturing becomes essential, because it builds human capital in a way other sectors can’t do as easily or as cheaply.
On the financial side, successful countries tend to keep capital at home and direct it toward productive investment. That usually means maintaining some degree of capital controls and guiding the banking system, so funds go into development rather than primarily into consumer lending.
Within that framework, there have been some smart adaptations. Mauritius is a good example. Rather than pursuing full land reform, it chose to heavily tax sugar while offering strong incentives to invest in textiles and garments. That effectively pushed existing elites into manufacturing, and it worked very well.
There’s a common misconception that Africa is exceptionally resource rich.
Joe: Leadership is extremely important in developing countries, as leaders are not just operating within institutions; they’re helping to build them. In advanced economies, on the other hand, institutions are deeper and more established, so any single leader matters less.
But while there’s an argument for continuity, long tenures aren’t essential. There are examples in Africa where leadership has rotated but the development path has held together. Mauritius is one, and Botswana is another. In Mauritius, power shifted across parties with very different ideologies, but the overall approach to development remained remarkably consistent. And in Botswana, the same party governed for decades, but leaders changed regularly and didn’t stay beyond two terms.
So, in a successful developmental state, it’s really about a broader group, often hundreds of people, who are aligned around the same goals. As long as that core group remains committed, the project can survive changes at the top.
Joe: I don’t think China’s share of global manufacturing prevents Africa from industrializing. China is facing rising labor costs and a strengthening currency. In addition, factory wages are now around $600 to $700 a month, compared to roughly $60 to $65 per month in places such as Ethiopia or Madagascar. That cost gap is what matters most at the low end of manufacturing, where Africa is starting out.
It’s also important to remember that Africa’s opportunity isn’t just about exports. This is a continent that’s heading toward 2.5 billion people by 2050, so a growing share of manufacturing will serve domestic and regional demand. You can already see that in rising intra-African trade in manufactured goods, even if exports to the rest of the world haven’t moved as much.
Joe: Chinese state banks have lent roughly $150 billion to Africa, with about 80% going into infrastructure such as roads and utilities. There’s also a growing Chinese presence in African manufacturing itself. Estimates suggest that 10% to 15% of manufacturing on the continent is already Chinese-owned, and that’s likely to expand.
Overall, China’s role has been mostly supportive, acting as both a source of capital and a driver of industrial activity. It also serves as an outlet for China’s excess capacity, similar to how Southeast Asia functioned for Japan, or how the Middle East did for South Korea at earlier stages.
Joe: I think that’s broadly right. We are at the early stages, but the direction of travel is becoming clearer.
From an investor perspective, one positive is that growth in Africa is becoming less volatile, and that should continue. In the past, heavy reliance on commodities made growth very cyclical, with sharp swings from boom to contraction.
What’s changing is that agriculture and agricultural processing are becoming a larger part of the economy, along with other more stable activities, which helps smooth growth and make it more predictable, which supports investment.
Beyond that, Africa, with 55 countries, will produce an extraordinary range of outcomes, from failure to strong success, and we will likely see very deep poverty in some places and unexpected growth in others. Asia already shows that spectrum, from Japan to Myanmar, but Africa may eventually exceed it.
More broadly, I also think African leadership needs confidence, but confidence grounded in delivery rather than rhetoric. As more countries achieve success, that confidence should build.
Growth in Africa is becoming less volatile, and that should continue.
Joe: Since I wrote the book, what I’ve seen in East Asia actually reinforces my thesis, in my view. The strongest confirmation is Vietnam, which I chose not to include because I thought it would make the book longer without really changing the argument.
But having spent time there in recent years, I think Vietnam is proof that it really is about policy choices, not geography. It is following the same trajectory as China, South Korea, Taiwan, and Japan, and is on track to become the most economically powerful country in Southeast Asia.
Joe: I think things still look broadly fine, but I didn’t address demographics in How Asia Works. In East Asia, you never had to worry about demographics during the early development phase. For instance, in 1960, South Korea and Taiwan already had enough population density to industrialize quickly, which increased over the following decades.
What has changed is that East Asia is now experiencing the fastest fertility declines in the world, first in Japan, then South Korea, and now China. That creates a completely new set of questions about how these economies can sustain growth.
Any investment or strategy mentioned herein may not be appropriate for every investor. There can be no assurance that investment objectives will be met. Products and services listed are available only to residents of this jurisdiction and may only be available to certain categories of investors. The information on this website does not constitute an offer for products or services, or a solicitation of an offer to any persons outside of this jurisdiction who are prohibited from receiving such information under applicable laws and regulations. Nothing on this webpage should be construed as advice and is therefore not a recommendation to buy or sell shares.
Please carefully consider the William Blair Funds’ investment objectives, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus and summary prospectus, which you may obtain by calling 1-800-742-7272. Read the prospectus and summary prospectus carefully before investing. Investing includes the risk of loss.
The William Blair Funds are distributed by William Blair & Company, L.L.C., member FINRA/SIPC.
The William Blair SICAV is a Luxembourg investment company with variable capital registered with the Commission de Surveillance du Secteur Financier (“CSSF”) which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). The Management Company of the SICAV has appointed William Blair Investment Management, LLC as the investment manager for the fund.
Please carefully consider the investment objectives, risks, charges, and expenses of the William Blair SICAV. This and other important information is contained in the prospectus and Key Investor Information Document (KIID). Read these documents carefully before investing. The information contained on this website is not a substitute for those documents or for professional external advice.
Information and opinions expressed are those of the authors and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC, or affiliates. Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Information is current as of the date appearing in this material only and subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. This material may include estimates, outlooks, projections, and other forward-looking statements. Due to a variety of factors, actual events may differ significantly from those presented.
Investing involves risks, including the possible loss of principal. Equity securities may decline in value due to both real and perceived general market, economic, and industry conditions. The securities of smaller companies may be more volatile and less liquid than securities of larger companies. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks. These risks may be enhanced in emerging markets and frontier markets. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit, and inflation risk. High-yield, lower-rated, securities involve greater risk than higher-rated securities. Different investment styles may shift in and out of favor depending on market conditions. Diversification does not ensure against loss.
Past performance is not indicative of future returns. References to specific companies are for illustrative purposes only and should not be construed as investment advice or a recommendation to buy or sell any security.
William Blair Investment Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission.
Issued in the United Kingdom by William Blair International, Ltd., authorized and regulated by the Financial Conduct Authority (FCA), and is only directed at and is only made available to persons falling within articles 19, 38, 47, and 49 of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons").
Issued in the European Economic Area (EEA) by William Blair B.V., authorized and supervised by the Dutch Authority for the Financial Markets (AFM) under license number 14006134 and also supervised by the Dutch Central Bank (DNB), registered at the Dutch Chamber of Commerce under number 82375682 and has its statutory seat in Amsterdam, the Netherlands. This material is only intended for eligible counterparties and professional clients.
Issued in Switzerland by William Blair Investment Services (Zurich) GmbH, Talstrasse 65, 8001 Zurich, Switzerland ("WBIS"). WBIS is engaged in the offering of collective investment schemes and renders further, non-regulated services in the financial sector. WBIS is affiliated with FINOS Finanzomubdsstelle Schweiz, a recognized ombudsman office where clients may initiate mediation proceedings pursuant to articles 74 et seq. of the Swiss Financial Services Act ("FinSA"). The client advisers of WBIS are registered with regservices.ch by BX Swiss AG, a client adviser registration body authorized by the Swiss Financial Market Supervisory Authority ("FINMA"). WBIS is not supervised by FINMA or any other supervisory authority or self-regulatory organization. This material is only intended for institutional and professional clients pursuant to article 4(3) to (5) FinSA.
Issued in Australia by William Blair Investment Management, LLC (“William Blair”), which is exempt from the requirement to hold an Australian financial services license under Australia's Corporations Act 2001 (Cth). William Blair is registered as an investment advisor with the U.S. Securities and Exchange Commission (“SEC”) and regulated by the SEC under the U.S. Investment Advisers Act of 1940, which differs from Australian laws. This material is intended only for wholesale clients.
Issued in Singapore by William Blair International (Singapore) Pte. Ltd. (Registration Number 201943312R), which is regulated by the Monetary Authority of Singapore under a Capital Markets Services License to conduct fund management activities. This material is intended only for institutional investors and may not be distributed to retail investors.
Issued in Canada by William Blair Investment Management, LLC, which relies on the international adviser exemption, pursuant to section 8.26 of National Instrument 31-103 in Canada.
The content contained in this site is intended as informational or educational in nature and does not constitute investment advice or a recommendation of any investment strategy or product for a particular investor. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions. Investors should consult a financial professional/financial consultant or investment adviser before making any investment decisions. Investing includes the risk of loss.
Copyright © 2026 William Blair. William Blair is a registered trademark of William Blair & Company, L.L.C. “William Blair” refers to William Blair Investment Management, LLC and affiliates.