In this episode of the McKinsey Global Institute’s Forward Thinking podcast, cohost Janet Bush talks with Carlos Lopes. He is a professor in the Mandela School of Public Governance at the University of Cape Town. He’s also an affiliate professor at Sciences Po, Paris, an associate fellow in the Africa Program at Chatham House, and a member of the African Union reform team. Lopes was the policy director for UN Secretary General Kofi Annan and executive secretary of the UN Economic Commission for Africa. He serves as an advisor on MGI’s research on Africa, including our latest report, which discusses the continent’s human capital and natural resources and how they can help to accelerate productivity and reimagine Africa’s economic growth. His views are his own. In this podcast, he covers topics including the following:
- The factors constraining Africa’s potential
- The promise of AI for Africa
- The threat and opportunity of climate change for Africa
Janet Bush (cohost): I have visited different parts of Africa a number of times—for holidays and for work—and loved every trip and found it fascinating. But I honestly don’t feel that I am that well informed. What about you? How much do you feel that you know about Africa?
Michael Chui (cohost): Definitely not enough for sure. I guess I have learned a thing or two about one country or another, but I can’t say I understand all the details and dynamics. After all, it is a huge continent with enormous diversity.
Janet Bush: Yes, indeed. Our guest today is not only a leading African economist, but also an African who has first-hand experience of the continent’s turbulent history. And that history still exerts its influence today. He is a realist but also an optimist.
Michael Chui: I am really looking forward to hearing what he has to say.
Janet Bush: Welcome to our podcast, Carlos.
Carlos Lopes: Thank you, Janet. It’s a pleasure.
Janet Bush: You were born in a small village in northwestern Guinea-Bissau but have very much worked on an international stage. And it is an extraordinary journey, and I'd love you to tell us about it.
Carlos Lopes: Well, in fact sometimes difficulties turn into opportunities. And the fact that I was in a country without university at the time created the opportunities for me to start working before having the possibility of graduating from any university and eventually going to study abroad.
I ended up in Geneva thanks to a network of contacts and very lucky opportunities. And in Geneva, obviously, the familiarity with the United Nations is pretty clear. So I started trying to see whether I could increase my income by doing some freelancing with Swiss Radio International.
That allowed me access to the United Nations. I was going there for interviews and to try to get as many opportunities to infiltrate the system as possible. And that sort of touched my life. Later I joined research, but from research I always had an eye on international issues, interest in the United Nations’ development.
And eventually I ended up at the United Nations, first as a development economist in their development program, and then later in different capacities, including working for Secretary General Kofi Annan, which was the highlight of my career, because of the learning that was associated with it.
Then when I left the UN after 28 years of many managerial responsibilities, I returned to academia. And from academia, I continued to be quite involved in global issues, joining various global commissions, helping the African Union, and also making sure that through participation in different boards of foundations and think tanks, I continued to be active in this field of development, which now more and more is also the field of the intersection between development and climate.
Janet Bush: We’ll talk about climate later, of course. But I just wanted to go back to your childhood, because you met a man called Mário de Andrade, and it’s a fascinating connection, and it speaks to a very turbulent time in your country. Could you tell us a bit about him and the times that you were a child in?
Carlos Lopes: We are talking about the ’70s of the last century, when the Portuguese former colonies—I come from Guinea-Bissau, one of them—were attaining independence after a very long fight and the downfall of the fascist regime in Portugal. So in Guinea-Bissau, everybody was very excited and busy with the postindependence first days.
I was a very active youth leader at the time and was very interested in culture, very interested in everything that had to do with intellectual challenge. So some people made sure that I would meet an important Angolan figure, Mário de Andrade.
Before actually being in Guinea-Bissau, he went through a number of very important functions. He was one of the organizers of the first Black and African writers’ congresses. He was in charge of the first journal published in Paris dedicated to African literature. He was also, out of Algiers, in charge of coordinating movements that were fighting colonialism at the time.
He had all the names, the big names of the time, from Jean-Paul Sartre to Che Guevara, in his list of contacts. But unfortunately for him, this very open spirit of freedom did not go well with his own party. So he was eventually expelled from it and ended up in Guinea-Bissau.
It was because of this coincidence that I ended up also having the opportunity to meet him, first, and then to work for him. And he was my real university, because this man was not only full of knowledge, expertise about the Africa of the times, but he was also one of the leaders of the Pan-African movement.
He was, by the way, the one that managed to get me a fellowship to go study in Geneva. So it was really an absolute pleasure to have this luck in my life, of meeting someone who was greater than life, but also someone that was so well connected that one could actually take off from Guinea-Bissau’s small dimension onto a global stage.
Janet Bush: It really is an extraordinary happenstance that you got to know him. It seems to me that therefore your interest in multilateralism, and indeed Pan-Africanism, was birthed at that time. Tell us how that has shaped your thinking.
Carlos Lopes: Amílcar Cabral was at the time considered one of the most important thought leaders of the continent, and he was in charge of a number of very important Pan-African responsibilities. And Mário de Andrade was the biographer of Amílcar Cabral.
By the time I met Andrade Amílcar Cabral was already dead. But as a biographer, he was the one who introduced me to his thinking and immediately immersed me into the Pan-African movement, how it was born in the diaspora because the diaspora didn’t have a very specific territorial claim.
But the continent—they could not identify themselves with the more straitjacket nationalist ideas that some of the leaders had at the time, and were more interested in the broader continental size as their identifier. And that’s how Pan-Africanism was born. And the Organisation of African Unity only came to be in 1963, after the different interpretations of what should be the nationalist movement in Africa took shape.
And this competition was sort of mediated by the emperor of Ethiopia, using the symbolism that Ethiopia was the only African country not colonized. He managed to get the different groups together, and eventually that was the beginning of a journey where Pan-Africanism was enshrined in the institutional setup called the Organisation of African Union, today African Union.
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Janet Bush: Fascinating. Well, I want to talk about economics. And it strikes me that Africa has so much to offer. In an aging world, a young and growing population. Many large companies, amazing entrepreneurs, land and resources. But there have been so many false dawns. Thirteen years ago, as you know, the McKinsey Global Institute wrote about Africa and the promise and the opportunity. And the 2000 to 2010 decade, the growth accelerated across most of Africa. But then growth retreated in 2010 to ’19. Why?
Carlos Lopes: Well, I like to joke that Lions on the move—which was the title of the McKinsey report—was so important and disruptive in terms of challenging the current, at the time, thinking about Africa that it really turned the Afro-pessimist attitude towards maybe too much Afro-optimism.
We have, from 2010, the beginnings of another wave of crisis in the continent, because Africa always suffers slightly later the impacts that each of the global crises brings.
The 2008–2009 crisis, the financial crisis at the time, had its repercussions on demand. This deceleration of certain economies, and because we are commodity dependent, our commodities became less attractive in different respects in terms of our exports, but also prices. And therefore in 2010 we started really to feel the heat of the financial crisis.
The same has happened now with the pandemic. During the pandemic, people were quite surprised with the African resilience. It did not suffer as much as other regions, from a sanitary and economic point of view. But it suffered much more later, about one or two years later.
So it’s always been the trend. And I think what we are now much more conscious of is that Africa has to deal with three dimensions of its development trajectory that are very difficult to master, despite doing the right things.
One is the large commodity dependence that keeps us from industrializing and making sure that we integrate value chains and all the requirements of productivity in a much more meaningful way. Unless Africa really puts to rest this commodity dependence that comes from a colonial model, it’s going to be very hard to make a transformation.
Second is the fact that we don’t really have, historically, examples of economies that have grown since the Industrial Revolution, in the 18th century, without access to credit and liquidity. And Africa has huge difficulties to access the levels of investment and capital that are needed to make transformation possible.
So we are always sort of in the above-the-water situation, not with enough credit to make the economy really grow. And obviously this is half the responsibility of the Africans themselves because they don’t have the savings culture and also have not developed the institutions that would allow for capital markets to thrive. But it’s also the consequence of the international financial architecture that is making it very prohibitive for late entrants to really make a dent.
And then the third characteristic that really makes Africa suffer more than it should, not linked necessarily to its own making, is the fact that it is always a terrain for geopolitical football games. You have, now, middle powers trying to influence different jihadist movements. Terrorist activities are very much funded from abroad. You have, of course, the internal domestic problems that are a very good, fertile ground for this to grow. But the majority of these developments are actually attributable to the interference of outside powers.
Africa is always a terrain for proxies. It was so during the Cold War, it continues to be today with jihadist movements, and God knows, but maybe in the future it’s going to be also the terrain for another Cold War, if the tensions between the West and China with what is happening with the war in Ukraine are an indicator of times to come.
So I think that the report underestimated some of these global exogenous dimensions that Africa really does not control and are not necessarily linked with its performance.
Janet Bush: And if you look at endogenous factors that might be holding Africa back, what would your top three be?
Carlos Lopes: Obviously everybody will focus first on governance, and there is no doubt that African politics has been influenced by a number of factors that are very peculiar to the region. After the colonial administration was replaced by independent states, they continued, in most cases, to treat the population as subjects rather than citizens.
So politics has evolved around creating a space for the elites that have more rights than the rest. And the rest basically are just treated as subjects. And this, of course, creates a very bizarre interpretation of the democratic dispensation. Because what we end up with is having symbolic developments in the political institutional settings that do not correspond to the informal politics.
We talk a lot about the informal economy in Africa, but in fact the informal economy and the informal politics go together. If you have one large portion of your population that doesn’t even have IDs or birth certificates—basically civil registration—it’s a very interesting indicator that you really are treating them as subjects. Because if you don’t formalize the relationship between people and the state, to the point that I think the figure right now is 40 percent of the African population not having civil registration, it tells you that they are being treated as subjects, not really participating fully.
The second factor that I think people normally point to is one that I already mentioned, but maybe I will go deeper. Commodity dependence is really the result of a lack of ambition. And a lot of it has to do with the fact that we have an elite that is rent-seeking in terms of its behavior, and therefore is content. If they identify the wealth of a country with one specific commodity earnings. “I have oil, therefore we are rich.” “I have diamonds, therefore we are rich.”
And, of course, what this turns out to be is basically having resources that are not the result of real transformation and gains of productivity and making sure that the economy is growing with quality.
So you can have growth, but it does not really translate into real structural transformation of the economies.
So I think those are the two big reasons why we are lacking in progress. And we continue to look at other regions with a certain degree of jealousy, because they have been able to master phenomena such as the ones I just described.
Janet Bush: But do you see signs of change? I remember, many years ago when I was a journalist, watching Cyril Ramaphosa speak at the World Bank. This is well before he was elevated in politics.
And he said, “Look, we don’t want aid. We want a level playing field. We want investment, we don’t want subsidies. We have everything in Africa. We have amazing entrepreneurs.” But do you see that vibrancy and that entrepreneurism in action? And is it beginning to change, despite the headwinds that you’ve talked about?
Carlos Lopes: I think it’s very clear that we have now a group of countries that are really reformists and are doing the right things. If you look into the various sets of indicators—business attractivity, investment promotion and attractivity, reforms in the structure of the economy, increased efficiency in tax collection, so you can go on, one after another—you will see that there is now a group of countries that are really doing the right things.
And, of course, we have examples that have been shining for quite some time. But normally it’s the small countries, so we tend to discount them. You know, countries like Botswana, Mauritius, and the like. We don’t give them as much credit as they deserve. Because, in fact, they have the absolute influence in the debate because they have succeeded. So they are quoted, they are mentioned. People are curious about what has gone right there, and they want to learn.
But unfortunately, the largest economies in the continent are dragging us down. If you take countries like Nigeria, Egypt, South Africa, they have been growing very slowly. South Africa has everything to really propel the continent in terms of productivity gains, expanding the efficiency of service provision, and certainly has the quality resources for a very vibrant tertiary sector.
Egypt is certainly a country that has not allowed its private sector to grow as much as it should. It continues to be under the grip of the military establishment. And that creates a bit of a problem. And it’s not really a promoter of regional integration. It has become a bit more so over the last four or five years, but it’s quite recent.
And Nigeria, it’s really different countries in one. You have the southeast part of the country that is growing at a steadfast pace and certainly very modernized in relation to the rest. And then you have part of the country that basically lives off the subsidies of the oil exports and have not really taken care of the rest of the economy.
So one way of looking into all these difficulties in a sort of a pattern is to demonstrate that countries have, for the moment, not done enough in terms of industrializing. And it’s not because the possibilities are not there. It is true that parts of the world have experienced premature deindustrialization, and it is true that automation, robotization, and machine learning is going to change completely the rules of the game, including now, even more so with artificial intelligence.
But it is also true that Africa can count a lot on its own very large domestic continental market. And for certain value chains, the competition would allow entrants like latecomers. And Africa is not taking full advantage of it, but I see that some countries now are very much versed into what needs to be done. And they are progressing well.
Janet Bush: It is interesting, I believe, that our latest research says that Africa trades much more with the rest of the world than it does with its neighbors. So only 10 percent of imports come from another African country, and only 17 percent of exports are going somewhere in Africa. And that’s a huge wasted opportunity. What can be done about it?
Carlos Lopes: Well, of course what can and should be done about it is to put in place the original integration treaties that have been adopted since the ’90s, the so-called Abuja Treaty that envisioned, amongst other things, the establishment of the African Continental Free Trade Area.
Now, this African Continental Free Trade Area should be perceived as a building block of a larger ambition. But it is one that really comes at the right time, I would say, because there are tendencies now to unravel trade rules. There will be much more pressure for trade to be associated with climate action.
Therefore, a lot of new modalities and new forms of protectionism may emerge. So Africa really comes with its free trade ambition at this very time where things are changing, and therefore it can really carve out for itself much more independence if it does the right things.
And also can make its market very attractive because it’s going to be a very large one, surpassing in number of people, consumers, therefore, the likes of China and India. And for those who have some hesitation about these prospects, I like to remind them about just one aspect that I think is pretty telling is that the more tech-intensive products and processes will become, the more they will be appealing to the younger population, not to the older generation.
That basically means that this consumer market cannot be underestimated. And those who will underestimate it will pay a very high price. Because that’s where the youthfulness will be, focused and concentrated in the creativity that is associated with youthfulness.
Janet Bush: On that point, on technology, you’ve raised the issue of AI, which everybody around the world is suddenly waking up to—at least I am—and worrying about as well as seeing an opportunity. Where is Africa now in terms of the technological frontier, in terms of adoption? And is AI an opportunity or a threat for Africa?
Carlos Lopes: We have very interesting examples of Africa being a very interesting—I’m choosing my words—player in technology. But we don’t have scale. I’m going to just mention a few examples. Everybody talks about M-PESA and the mobile payments platform that then catapulted Africa into becoming the largest such user of mobile banking.
We can also mention the fact that agriculture in Africa is now benefiting more and more from the access that technology allows to shared opportunities and a sharing economy.
You also have, in Gabon, the first industrial park that is certified with the highest environmental standards. And it’s an industrial park dealing with wood. So it’s a very interesting example.
Or you can mention the fact that you have, in the city where I live, in Cape Town, a corporation like Naspers that is the largest investor of Tencent, which is the largest tech company in China. It has investments in about 30 countries, and most of them are actually in the area of e-learning, so where they have become basically the largest investor and have an arm in the stock exchange of Amsterdam, that is one of the largest investors in tech in the world.
All of this is happening in Africa. And it’s happening because the opportunities exist, although they are sort of scattered and not dense, they indicate that it’s not a desert. And the opportunities can be tapped, based, I already mentioned it, in the youthfulness of the continent.
And all studies point to the direction that creativity is going to become much more important, with artificial intelligence taking over a lot of more mundane responsibilities and becoming more and more “learned active.” And I think we are going to see a world where the possibilities of digital migrants and other employment and work transformations are going to offer opportunities to the continent.
Janet Bush: It sounds like you have some optimism about how Africa can leverage its young and growing population, then.
Carlos Lopes: I’m very much against the sort of Malthusian interpretation of population growth becoming a major disaster, particularly because people like to talk about the demographic dividend depending on investments in human capital.
There’s nothing wrong with the principle. But what people really forget is that the globalization of knowledge that is allowed by the new technologies is going to create opportunities for learning that are unconventional and do not depend just on formal learning institutions.
The youth is already demonstrating that. They absorb probably much more, in Africa, certain types of knowledge than are imparted by the institutions, because they have smartphones or because they have laptops, the moment they have bandwidth, they just take off. And the bandwidth increases in Africa are quite significant. We are late in relation to others, but catching up very quickly.
Janet Bush: We can’t close without talking about climate change. Obviously Africa is heavily exposed. But then we also say in our research that there’s a large opportunity. It talks about eight manufacturing opportunities that could generate potentially up to $2 billion in revenue a year and 700,000 jobs. Things like off-grid and microgrid solar systems and electric two-wheelers. We talked about the lack of manufacturing capacity. Is that realistic, do you think?
Carlos Lopes: Climate is a problem for Africa but also an amazing opportunity. It’s a problem because we suffer more than the rest. We are already with temperatures that are way above the average that the world is seeking. We have suffered more from the impacts of climate change than any other region in the planet. And we have contributed the least.
If we take South Africa out of the indicators that are attributed to the continent in relation to emissions, we contribute about 1.5 percent of the emissions in the world. It’s with South Africa that we double that, because they have a very high dependence on coal and are one of the major polluters of the planet.
The conversion into renewables in Africa should be an obvious choice because we also have the largest potential. Not only in solar, hydro, but also in green hydrogen. So I would say, based on the International Energy Agency, that the world cannot really solve its energy transition without Africa.
The question is to know whether Africa’s going to have another wave of commodity dependence this time around, attributed to strategic minerals and the exports of energy of a new type, or are we going to use this as a unique window to actually industrialize and make the potential that the McKinsey report has identified is possible?
For me, the difference is going to be whether Africa continues to deal with international negotiations on the international financial architecture as a continent and a group of countries that is seeking development aid—now relabeled climate finance—or is it going to really create an opportunity for more agency in terms of changing the rules of engagement that continue to make investments in renewables and other types of transformation in need of derisking.
The terminology here is very telling. If you need to derisk, it means that the business as usual is the other type of business, which is the fossil-fuel-centered one. So it’s for Africa really to put this upfront and negotiate differently. And that is not going to be possible unless the continent really presents itself unified.
The litmus test of whether we are ready is the implementation of the Continental Free Trade Area. If we fail its implementation, or we continue to go sideways, and some countries are going and negotiating bilateral deals, undermining the collective, then it’s another very interesting demonstration of Africa’s failure.
A recent example of what I’m mentioning is the fact that you have a carbon tax mechanism that has been implemented by Europe, the European Union, the Carbon Border Adjustment Mechanism, and Africans have failed to actually unify a position and defy it. Because they are going to suffer from that tax and they are going to basically now have to live with it because it has been passed through law. And unless we challenge through WTO [World Trade Organization], which seems difficult but not impossible, it’s going to be very difficult to reverse.
So it is this type of attitude where we expect Africans to demonstrate a real change. And unless that happens, well, we’ll have a continuation of the latecomer status.
Janet Bush: Do you feel optimistic or pessimistic at the moment on that front?
Carlos Lopes: I like to say that I’m realistic. Because I help a lot of countries in the African Union negotiate, I never give up. I continue to punch and to try to see whether there is awakening. There is some response here and there.
Like, for instance, this is a crucial year. We are going to have, between now and COP 28 in November, a number of summits that are going to debate reforms, both in the Bretton Woods international financial architecture and the World Trade Organization. So it’s very important for Africans to use 2023 as a launching pad of a new attitude. So let’s not give up before the year closes.
Janet Bush: It always strikes me that people have a lot of misconceptions or preconceptions about Africa. What do you think is the biggest preconception or misconception that you come across?
Carlos Lopes: I like to teach about misperceptions. And normally I try to identify the origins of the current misperceptions, to Hegel as a philosopher attributing history to the written word. And basically saying that in Africa we didn’t have the written word, therefore Africa’s history started with the arrival of the foreign powers.
There’s so much wrong with that interpretation, first because the written word, if you go all the way to its most remote origins, are the hieroglyphs from Egypt, which obviously come from Africa. All the way to the fact that history really cannot be simplified as starting with the written word.
Because obviously history is our social developments and movements of a political and other nature that precede the written word in many parts of the globe. But it is really a very interesting way of saying the European Renaissance created an interpretation of Africa that still is the mainstream view.
I say “mainstream” because, you see, I like to call it the Mercator syndrome. Because the Mercator projection gave us a planisphere, it gives a world map that diminishes Africa significantly with the same size as Greenland, although it is 14 times bigger.
That image is very much representative, symbolically, of the diminishing of Africa. And, of course, what strikes me is that Google Maps still uses it. So that means it’s no longer a problem of knowledge, it’s a problem of comfort.
Janet Bush: Interesting. So listen, I just want to close on a couple of very quick questions. What would you have done or would have liked to have done if you hadn’t become an economist?
Carlos Lopes: When I was a young man, I wanted to be a DJ. And then I wanted to be a photographer. And then I wanted to be a writer when I met Mário de Andrade. So all of those things really didn’t happen. But it created this very close interest in everything that is artistic and cultural. That continues to this day.
Janet Bush: How plugged in are you to the dynamic culture of Africa’s youth?
Carlos Lopes: Oh, very much so. I’m a fan of Afro beats. I’m very much involved in a project that is called Africa No Filter, which is about changing the narratives by young people. I’m a collector of paintings from young artists. Yes, very much.
Janet Bush: Yes, it’s such a vibrant scene. So, finally, what one piece of advice would you give to listeners of this podcast?
Carlos Lopes: I like something that I learned with Kofi Annan. When I was working with him, he said many times, when I was frustrated with developments that were taking place without attribution to him, that the ultimate proof of success was when others claimed your ideas as theirs. I think that’s the real influencer. And I think that’s the way to go to make things really happen. No claim of attribution, no claim of visibility, but a real interest in transformation.
Janet Bush: Thank you very much. It’s been a fascinating chat.
Carlos Lopes: Thank you, Janet.
