Beyond GDP



In this episode, Tobi talks to David Pilling, Africa editor for the Financial Times. They discussed his book "The Growth Delusion", exploring the significance and limitations of economic growth, particularly in poor countries. David challenges the conventional reliance on GDP to measure economic success, proposing a more nuanced approach that considers wealth distribution, environmental impacts, and overall well-being. He argues for a balanced view that recognises the necessity of growth for development while advocating for policies that prioritise human and environmental health. The conversation also touches on broader development issues in Africa, including the misuse of resources and the political challenges hindering effective governance and equitable progress.

The transcript of the conversation is below, and many thanks to David for coming on the podcast.

Tobi;

This is Ideas Untrapped podcast, of course, and my guest today doesn't need much of an introduction, anybody who reads the Financial Times knows David Pilling. He is currently the Africa editor of the Financial Times newspaper, he used to be the former Asia editor of the newspaper, and he has written many fantastic columns and essays covering a wide range of subjects. And recently he's been writing a lot about Africa, especially stories on development and other related matters. It's a pleasure to welcome David Pilling today.

Welcome, David.

David;

Thank you so much. It's a pleasure to be here.

Tobi;

I want to talk about your book for a bit and one question that keeps popping into my mind as I kept reading, that was a couple of months back last year, the general tone of the book, which is called The Growth Illusion was, you know, one of skepticism, right?Also, the impression that jumps at me from reading your economics-focused stories about Africa is that growth is important. So has your work in Africa forced you a bit to reconsider some of the positions you take in the book?

David;

Yes and no. I mean, the book never said growth isn't important. It is called The Growth Delusion. It's true. And that is a, you know, deliberately, I suppose, provocative title to some extent modelled after The God Delusion by Richard Dawkins. So it was a kind of an echo of that. So, yes, you're right. It was a sceptical title and journalists ought to be sceptical. And what I was doing was I was prodding at the concept of growth, what it is that we measure, how we measure an economy's success.

What I was not saying is that growth is not important. And I think growth is particularly important for poor countries. You know, we can put richer countries aside for one second, but in a poor country where there are not enough resources for people to have what Amartya Sen, the Nobel winning economist, calls sort of what we now know as agency, really. You know, choices over their lives, where they live, what work they do. And those choices can be denied by very simple things. Lack of food, lack of a roof over your head, lack of work, lack of safety and security. Unless those things are satisfied, then I believe that people aren't able to live their full potential. And for that, you need an economy that's firing at a certain level. In other words, you need to go from an economy that isn't firing to one that is. Then, of course, many other things need to happen, including the wealth that is therefore generated to be, you know, relatively equitably shared, for people have to have access to economic opportunities.

But my book was never saying, you know, growth is bad. We need degrowth, which I know is a trend of thought out there. But my book, despite the title, was really looking at other things, which I'm happy to go into if you'd like more of a discussion. But just to make it clear, I was absolutely not saying that if you have an economy where people lack what I would consider the absolute sort of basic minimum to live a fulfilled life, you know, those economies absolutely need to grow and they need to grow fast as the experience of Asia shows with the rapid growth in places like China, which has transformed hundreds of millions of people's lives and opportunities.

Just occurs to me that what just happened, you know, the power going out is in a sense a tiny example of what I'm talking about. You know, there you are making a podcast that you want to be a world class podcast and it's interrupted. I mean, in the end, it's not such a big deal and we are able to carry on. But it's just a little window into, you know, if Nigeria had a decent power system. then you and millions, in fact, tens of millions of other people would have much easier lives, would have much higher productivity, would be able to worry about other stuff. I mean worry in a good way. And, you know, we could call a better power station growth or a better power system, if you want. The money, the resources, the expertise, the systems to produce a good power system for all Nigerians so that all Nigerians can just rely on it and forget about the lights ever going out will make an enormous difference to people's lives. We can call that growth. And so I'm not against growth. I'm for growth.

Tobi;

Especially for the benefit of listeners who haven't read the book that perhaps I didn't frame that first question very well. The book not in any way suggested that growth is bad. And, of course, I urge everyone to read. It's a fantastic book. So what I'm trying to get at is there seems to be a big debate, even in the subfield of development in economics, about the appropriate measure for growth. The measure that best captures what makes a difference in people's lives, what people value, and you do a little bit of that also in the book, particularly in your discussion around GDP. So please just walk me through the history of the GDP, your critique of it, where it falls short, and what are the things, what are the other dimensions of well-being that it doesn't capture, and why is the field or policy reluctant to expand what we mean by growth?

David;

Yes. Okay. That's this very big subject when I wrote 250 pages on it. But let me try to encapsulate a few things. So GDP was invented, if I remember right, invented is probably the right word, in the 1930s, 40s by a guy called Simon Kuznets. And the aim, in a sense, was trying to encapsulate what was happening to an economy. And as hard as it is to believe before the invention of GDP, which really sort of measures all the products and services that an economy produces in a given period, before that invention, a single number to encapsulate what an economy is doing, there was no such number. So you could say, well, things feel good, people have work, the stock market is going up, there seems to be a lot of delivery of coal or whatever.

But there was no single number that said, you know, GDP is this and it grew by this. So the first thing to acknowledge, I think, is that this is a very clever number and it's an important number. And if you only have one number, it maybe is even the best one. Although somebody said in Mozambique, a finance minister, that he used to watch the May Day Parade and he judged the quality of people's shoes. And if people were wearing decent shoes, then he thought things were getting better. And if they weren't, he thought things were getting worse. But clearly, that's a very crude measure. So GDP, I'm saying, is not a bad measure, but it misses an awful lot and it distorts an awful lot. Let me give you a few examples. So the first thing to know about what we call growth, what we call GDP, is that it's a measure of what you might call flow. It measures what an economy produces, let's say, every year. It doesn't tell you anything about the wealth, which is the assets of that economy.

So let's take Nigeria as you're in Nigeria. If you take oil, which is an asset, and you take it out of the ground, you can turn that into GDP, into a flow of wealth. But eventually that oil is going to run out. So if you keep just taking out oil, selling it, spending it, take it out, sell it, spend it, eventually you've got no oil and you've got no money. And you could argue that maybe that's in part what Nigeria has been doing. The best thing to do with wealth like natural capital as it's called, is you turn that into other forms of capital. So you turn it into productive capital, which means infrastructure. So you'd build with those billions of dollars that have come out of the ground in Nigeria, a world class health system, world class transport, world class airports, world class universities, and you'd build human capital. Some of the same things with healthy, well-educated people who can then go on when your oil has run out and do many other things.

Now, it doesn't take a genius to work out that Nigeria hasn't done particularly well in that. Of course, there are brilliantly educated Nigerians and there are some lucky Nigerians in the elites that have access to good healthcare and good education, but often outside the system, sometimes indeed outside Nigeria. But what I would argue that Nigeria and many other countries have failed to do is to move that wealth into different sorts of wealth that will produce GDP again going forward. Because otherwise what your GDP has measured is a kind of a one shot. We took oil, we sold it, it's gone. So that's the first important thing about GDP is it's a flow, it's not the wealth.

Let me give you another example, and this moves into the environment. If you have a forest from the perspective of GDP, the absolute best thing you can do with that forest is chop it down as quickly possible and turn it into something else like a table. Turn your wood into a table or burn it or do something to produce energy or goods that you can sell and forget the forest. The forest is worth zero as far as GDP is concerned. But of course, the forest has its own value and once the forest is gone, it's gone. And our measures of economic progress take no account at all of the environment around us that I would argue has been a perverse incentive that has enabled us to think that we're doing extremely well producing all this growth, all this economic activity, but forgetting that there's a cost to that, which is the environment that we've been ransacking and polluting and degradating. And that can come back to bite us as we're seeing in global heating and in all sorts of other ways. Let me go to just a third thing and then I'll stop. So you can produce GDP and for all its limitations, it does tell you an awful lot. If you're growing at 10% a year, your economy is doing well, as China found out. China grew at 10% a year for 30 years, more or less and it transformed China from a poor country to a middle income one. However, how you distribute that income is also very important. There's a joke that economists tell, which I think is in the book, about Bill Gates, who walks into a bar. On average, everybody in the bar is a billionaire. But of course, the averages don't tell you anything. So you could have very fast growth in an economy.

Let's take Equatorial Guinea [which] grew very fast on the back of oil but most of the population continues to live in poverty. There's really been no attempt to spread that wealth. So no attempt to reinvest that wealth in the health and education that will produce more wealth, like science and development and all of that that will produce more wealth going forward. And also very little attempt to spread it equitably. So again, GDP doesn't tell you really much about that. And so these are three, I would say, fundamental limitations and fundamental different ways that we need to think about, you know, what is it that we're producing? If you say an economy is growing at 10% a year or 0% a year, what lies underneath those numbers? And what are they telling us about how people are living in those countries and the opportunities they have, which after all is the objective of growth. We don't want growth for its own sake, that's pointless. What we ought to want, I think, is to improve people's lives and opportunities. That's what we should be really measuring. And growth tells you part of the story, GDP tells you part of the story, but certainly not the whole thing.

Tobi;

These are important things you've raised. It's an important critique. I would not say that a lot of people who work on policy or who study these things are not aware of some of these things and the illusion of averages around GDP and what it captures, what it doesn't. My question then is, isn't this more of a critique of the politics or should I say the priority of the political class of a particular country as opposed to a critique of the measure itself, because the limitations are well known and how it falls short is known. So if you then persist with this measure that you know does not quite capture the wealth of the country, does not tell you anything about how income is distributed in the country, it does not tell you how much you are destroying the environment, and thus possibly future growth of the country, isn't that then a political problem?

David;

Yes, a very astute observation. Martin Wolf, a very sort of gifted, a brilliant, actually, economist at the FT, in a sense thinks my book is nonsense. I mean, I don't think he would go quite that far, but he would say, look, the problem isn't the measure. The problem is what you do with it. And to some extent, I absolutely agree with that. However, I do think that what you measure in a sense is what you get. If you set up, you know, we want the economy to grow by X amount, let's say, and you're going to be judged by that politically and to some extent you'll miss out on the other things, let's say the impact on carbon emissions, which clearly we have missed for 150 years. I mean, it's not as though we've managed to do both at the same time. We have missed this.

Now, in the end, you're absolutely right. It's a political decision. But I think if you took a political decision that we're going to do things slightly differently, you would probably want to measure different things as well. A lot of these things are measured, actually. If you go to the Office of Statistics in Britain, you'll find that they measure a ton of what I'm talking about. So I'm not after alternative measures or fancy indexes or whatever. In a sense, I'm after slightly different political priorities. So in a rich country, for example, I mean, even in a poor country, it doesn't really matter. You know one thing you might target is life expectancy. Not just life expectancy, I would argue, but healthy life expectancy.

So you might say, look, we think that it's reasonable in a country of our wealth and prosperity for people to live on average, and clearly it's going to be an average, 75 healthy years. And sure, the last couple of years, they're going to be unhealthy. That's just nature. And that's just what happens. But we're going to aim for 75 healthy years. And if that became your political target, lots of other things might change. You might start pumping more money into your health sector. You might start thinking more about primary health care, about preventative medicine, all sorts of things. Because you've tilted what you're measuring and your priorities, as it were, you then begin to tilt how you organise this.

And again, look at Nigeria. I'm bringing it back to Nigeria. If you take the GDP per capita of Nigeria and the GDP per capita of Ghana, I know this is a tetchy, tetchy subject to compare these two countries.

Tobi;

Go ahead.

David;

You know, I think I'm right in saying that the life expectancy of Nigerians on average is 11 years lower than Ghana. So I would say, well, what on earth is happening there? What does that tell you about the priorities of successive Nigerian governments? Now, it's obviously true, tweaking your measure here and there is not going to solve that. I think the life expectancy on average is 54. A lot of that will be because of very high child mortality. So a lot of kids not making it until the age of five. So, you know, you could have a government that says, right, by the end of our term, we're going to raise that to 60 as a start. A big country like Nigeria with all this oil wealth, this incredible talent pool, and anybody who goes to Nigeria knows that, you know, with doctors and nurses who, unfortunately, are all around the world helping other people. We can pull ourselves together and push life expectancy, let's say, to 60 as a starting point, not as a final point. And you could see then government policies shifting potentially in that direction.

So you can kind of see that measurements can lead to policy changes. Maybe they just focus the mind or maybe they're just a shared ambition. The public and the politicians who have entered into a contract, which is what an election is, “we’ll vote for you on the basis that you'll try and do A, B and C. If we don't like you, we'll kick you out.” That's kind of a highly crude definition of democracy. So you can see, potentially, you might say I'm being idealist or unrealistic, or maybe I am, but you can see how that could work as a guiding principle. So how you leave the confines of GDP to push another priority right up your list of what you're going to do politically, and then you're judged against that. That's where politics and measurement kind of meets.

Tobi;

With due respect to my Ghanaian brothers and sisters, there might also be a little bit of statistics going on there because the life expectancy in some parts of Nigeria may actually be higher than Ghana because Nigeria is quite a big area. But your answer, let me pull you into another debate from that answer, which is income versus, should I say, the rest of other measures of well-being. As you've written about, you're familiar with the SDGs and the predecessor - Millennium Development Goals. And I've had guests on the show, maybe someone like Andrew Nevin, who would say that poor countries can do better with alternative measures like what you have on the SDGs, zero hunger, this and that, as opposed to the annual churning out of GDP statistics.

But a different class of economists or thinkers will tell you that what really makes a difference is for the income of the population to grow and that higher income is highly correlated with all of these things that you say, including life expectancy. If you have more money, you will be able to eat better, afford better quality care, and your life expectancy will go up. It also pulls into what some in the economic subdiscipline and some global charities have been doing, which is interventions - deworming, cash transfers, bed nets, and so many ways that they measure that. But again, some economists will insist that, yes, you can do that and it's not a bad thing to do. But if you have the policies that are able, like you mentioned the example of China and some other countries that have been able to transform radically in just decades, South Korea is a fantastic example, then all this other things that we use as a critique of economic statistics become irrelevant once the majority of the population are able to increase their average income. So what's your reaction to that?

David;

Well, I agree with when you were saying there's some economists. So the second half. So if you have to choose between however many SDGs there are, all these different multiple complicated targets versus let's increase the income of each of our people. I'm definitely on the latter side. And in that sense, income, I think, is absolutely key. You'll find a curve when people go from a couple of thousand dollars per capita income towards 15,000, 20,000, things get better along that curve. Of course, you can blow it. You can have terrible policies. But assuming that you have reasonable policies and reasonably equitable distribution of that income, then there's a pretty good correlation. And you're absolutely right. You will move up that curve. Your health will get better. Your opportunities will get better. Your education will get better. Probably you'll have fewer kids. You'll put more money into each of those kids. They'll do better, et cetera, et cetera. And you'll get into an upward spiral. And in that sense, you're absolutely right. Yeah, then, you know, your bed nets become irrelevant because you've got middle income, educated people who know what they need to do and besides, you probably don't have stagnant pools of water. And besides, you probably have enough money to have a mosquito eradication thing. And, you know, a well-organised policy, which is producing that kind of growth is likely to, in a sense, be kind of self-fulfilling.

So absolutely. In that sense, I don't have a beef at all with income as a measure of the potential to improve people's lives. And I think I can hold the two ideas in my head simultaneously. I think I can prod the measure of GDP, particularly, I would argue, or wealthier countries, as well as saying it's probably the best measure, particularly as you go from the poverty, let's say, of a country like, it's invidious in a sense to name countries, but let's say Democratic Republic of Congo, you know, up through middle income, you know, your kind of Malaysias or whatever, there you'll find that rising income. And I keep saying, reasonably, equitably shared among the population, which is important, of course, then that will have your number one transformative effect. I have no argument with that at all.

Tobi;

Maybe I've been, I don't know, unfair to you by putting your book in the context of poorer countries, because certainly that wasn't the primary cohort of the analysis of the book. So, I mean, you talked about healthcare. You cited the American example, which was such a big, big, big talking point until Obamacare, and it still continues to be. For example, if you compare the American healthcare system with the Canadian healthcare system, and I know so many public policy analysts and other forms of thinkers look at Canada and say, oh, that's what we should be when they talk about America. But there are lots of Canadians and other people from countries with fantastic healthcare system who wants to move to America, who would move to the United States in an instant. So, again, does that tell you that a lot of these things that we worry about is not what people care about on average?

David;

Well, this is a very different question, I think. I mean, look, the American health care system, I would call inefficient, unequal and at its best, excellent. And it can be all of those things. So if you're a wealthy American or if you're an American with good health insurance, you probably have among the best health care systems in the world. The problem is if you're not wealthy, you don't have good insurance, then you have a pretty average, even a bad health system. The Canadian health system is probably more equal and certainly more efficient. The Americans also spend too much money for what they get. So they spend, I think, 20% of a very big GDP per capita on healthcare or of their entire GDP on healthcare. And that's quite inefficient. A lot of that is kind of litigation, it's profits, it's insurance and all of that. So it works for a good proportion of the population. As I say, if you're middle class, upper middle class, you probably have the best or among the best health care systems in the world. And that will figure in all sorts of things. Healthy life expectancy, for example, a very crude measure, but worth looking at. But if you're not in that category of people, then you probably have a pretty average health care experience.

And again, averages can tell you something. You know, life expectancy in the US has dropped for 20 years. Tiny, tiny, tiny amount. But what's going on? The economy has been growing, you know, with a few bumps, but it has been growing. There are wealth being created and yet that's not transferring into better life expectancy. You know, there are things like the whole OxyContin issue, et cetera, that begin to explain that. There's what people call lives of despair [Deaths of Despair], you know, suicide and people who just feel pushed out of the middle class. So it's affecting a subset of the American population, but that's enough to kind of bring the average down. So I think you have an unequal system. And that's how I would compare it with the Canadian system. I'm not familiar with the Canadian system at all, but I can imagine it's sort of like a UK style, free at the point of service, roughly like that. And the UK system has all sorts of huge problems. But again, if you have a health emergency, it's probably going to be a pretty good system. It's less good at dealing with sort of preempting health problems and preventing health problems. But again, I think this is possibly leading a little bit off the subject of GDP, but that's how I would explain the differences in different health systems.

Tobi;

Yeah, so my question then is, but a lot of people still want to move to countries where they think they can get rich really fast, where they think their skills can be better compensated and more often than not, that is usually the United States, despite the inefficiencies and inequalities of the health care system at the lower end. So, now does that mean that people do not know what they want or they value growing their personal income better than a lot of these other things that we talk about?

David;

I mean, America is still the biggest economy in the world, measured in dollar terms, not in PPP terms. So it's the biggest economy in the world. It's clearly very dynamic. If you're in tech or IT or AI, this world leading technology, world leading universities. You know, if you're making it in America, you're making it pretty big. And immigrants tend to be people who are ambitious. They're driven. That's why they picked up and left their country and gone somewhere else. You know, America can seem quite attractive. You kind of think if I'm going to roll the dice somewhere, I'll roll it in America. Now, if you're American, social mobility actually is not as good as it has been in the past. And it's not as good as in some European countries. That's quite a counterintuitive. But I've read a number of papers and data to suggest that. But still, you've got a big, powerful, high-tech economy that kind of sucks up labor, that's bounced back much quicker from the global financial crisis, that's bounced back quicker from COVID than most other equivalent economies.

You know, if you're thinking, where am I going to go? Where have I got my best chance of making it? You know, it's not irrational to think, well, America's big enough for me, you know? So I don't see the two in contradiction. I don't think people are saying, I'm going to go to America because on balance, it has the most rational healthcare system that's the best use of resources. People don't think like that. They think like, where am I going to go, fit in, have a chance? So I would say that's what attracts people to the US.

Tobi;

Yeah. Let's talk about the environment a bit. I don't know if I have the right phrase here, but it seems to me, as recently demonstrated by the recent spat on BBC between the host and the president of Guyana, by some countries, again, on the poorer end of the global wealth spectrum sort of fighting for their right to pollute, i would call it, Which is that you cannot tell us now to care about the environment, sustainability, low-carbon green economy, when you've had 150 years to basically do what you want, which sort of then got us into this problem. I don't necessarily agree with that argument and I do think that there's no part of the world that is insulated from some of the big, terrible changes we are going to see from global warming. But what's your reaction generally to that argument?

David;

OK, well, I do have some sympathy with that argument, but again, like most things that are worth talking about, it's complicated. So let's just start with a few basic facts. And, you know, I've never really written about the environment as a core subject, although I have written about it quite a lot both from Asia and increasingly actually from Africa. So bear that in mind. But let's take the per capita carbon emissions of Uganda. When I last looked, I think there was 0.1 tonnes per capita per year. And compare that with America which I think is 20 tons per capita per year. Now, if you say to a Ugandan, you have to be really careful because the world's on the brink of catastrophe so you guys need to cut your carbon emissions. I would agree with people who say, well, that's nonsense. I'm not cutting my carbon emissions. What Uganda needs to do, I would argue quite strongly, is to increase its carbon emissions.

Now, of course, that doesn't mean to say Uganda's ideal path of development is to copy in its entirety everything that went on in the West, which would be massive, crazy pollution with coal-fired power stations and whatever destruction of the environment, followed by a kind of, oh, my God, what have we done moment, drawing back and then are trying to kind of address the problems. Often, by the way, outsourcing your pollution to some other poor country. But anyway, I'm not saying that that is the path to go. But I am saying that from per capita carbon emissions of 0.1 tonnes, then yes, the only way is up for a bit. Because I don't believe that you're going to be able to get out of poverty without increasing those carbon emissions a bit.

Albeit that we have solar power, we have wind power, we have all of this. And clearly one doesn't need to emulate the old fossil fuel model in its entirety. But I think that it's reasonable to assume that, say, in Mali, where per capita people use the same as British people use to boil their kettle. So that's the power consumption in Mali, what we in Britain use to make our tea, basically. And you're saying to a Malian, sorry, that's all you've got. Now, that I think is totally unfair and is unsustainable politically and rightly so. So I think that the Malis and the Ugandas of this world will have to increase their carbon emissions a bit as they become wealthier.

But as soon as possible and wherever possible, they ought to embrace new technologies, green technologies, which in some cases will be cheaper and more efficient anyway. But, you know, we still don't really know, for example, how to make cement using green technologies. It's there or thereabouts, I believe, but it's not really proven technology at scale. And we can't say to Uganda, sorry, you missed out on concrete. You know, that one that one passed you by. Clearly this is ridiculous and unsustainable. So I do have sympathy with the view.

Of course, you can abuse that view. You can say, you know, you polluted for 150 years. Therefore, we're going to just carry on recklessly as normal. Let's take the conversation back to Nigeria. There is a conversation in Nigeria, you know, how dare you tell us that we can't use our oil and gas? Now, I have some sympathy with that, but the corollary and the additional argument is we need to electrify. We need to bring power to 600 million people in Africa and to a 100 million people in Nigeria who don't have power. I completely agree. But I would say, what have you been doing the last 30 or 40 years? The oil's been pouring out of the ground the last 30, 40 years, and that did not translate into electricity for all Nigerians as it should have done.

So it doesn't follow that if you're allowed to follow this fossil fuel path, that all will be right with the world. Policies need to be intelligent. And intelligence means to the extent that you do use fossil fuels, you must use them efficiently and for the benefit of your people. And where possible, you stop using fossil fuels, you embrace new technology. South Africa has a ton of coal, for example, but it also has among the best solar and wind potential in the world. Its problem in transitioning, and of course, as you'll probably know, South Africa is having trouble keeping the lights on. Its problem in transitioning from coal to solar and wind has not been primarily a technical problem. It's been primarily a political problem with people trying to protect the coal industry. That is a mistake. But I don't think you can say to the Ugandans of this world, sorry, you missed the boat. We don't really know how you're going to prosper in this new green world, but good luck. I think that does not wash. So in that sense, I have sympathy with the Guyanas and the Malis and the Ugandas of this world, yeah.

Tobi;

But not Nigeria.

David;

But clearly, you know, you need governments that use their oil wealth better. I don't think you would find a Nigerian that would disagree.

Tobi;

I agree with you. Again, I'm not trying to frame this as a direct consequence of your work or what you've written, just trying to expand the scope a little bit. So I want to get your sense about where you think policy should go in trying to strike a balance. Because as you know, a lot of African countries are in financial distress from sovereign debts. The domestic investment environment is not that great so even if you want to keep insisting that, oh, we're gonna pollute we're going to do this we're going to do that, if the global investment appetite for fossil fuel continues to dwindle as policy in the West is forcing companies to divest, you might not have a choice, even if you want to pollute at the end of the day, because nobody would be willing to invest in that in the next 20 or 30 years. So my question to you then is that how do you think that the policy environment, especially around all these global gatherings and perhaps even some more pragmatic measures can strike the better balance between these two views.

David;

Okay. Well, again, a complicated question, but definitely one worth asking. There are a few things going on there. The first thing I'd say is that finance just sort of cutting off all carbon, all fossil fuels is almost certainly unfair. And the idea that gas, for example, could be a transition fuel is one worth considering. But there's a big caveat here. And the caveat is the following, really. I don't really believe that there are many governments in Africa that have a serious plan for development. I mean, that's quite a big, harsh thing to say. But, you know, you had Stefan Dercon on your program. Gambling on Development was the name of his book. You know, if you're going to use fossil fuels to improve the lives of your people, fine. But where is that being done? Maybe in Senegal, maybe in Ghana. You look around the continent and you struggle to find these success stories where people are saying, no, no, no, world, we're not listening to you, we're going to use our fossil fuels because right now we're in this fantastic phase of growth and development, and, you know, if you cut off our fossil fuels, you're going to stymie that. You've got a lot of countries that are hardly at the starting line, I would say. And again, that sounds quite harsh. But, you know, you take Ghana, which is a relatively successful African economy. But Ghana had the same GDP per capita. This is oft used. In fact, I think it has had a higher GDP per capita. But probably these measures are imperfect, as we’d suggested at the beginning of our discussion. But somehow it was not dissimilar from South Korea.

South Korea is now 20 or 30 times as rich as Ghana in per capita terms. South Korea has done something that Ghana never did. And Ghana is a relative success story. So South Korea has certainly done something that Democratic Republic of Congo or Niger or Angola or Liberia or Zambia have never done. It's managed to take off economically. Yes, using fossil fuels. Now what we're being told is, you know, you can't use fossil fuels. But I'm also asking, where is the plan for development? Where is that big transforming development happening on the continent? That's what's necessary. That's what I want to see. But you have to kind of look quite hard to find it. And you're going to be finding the kind of the beginnings of it. Let's say in Ghana, in Senegal, you know, maybe in Rwanda, maybe in Ethiopia before it blew up politically. But you do have to look quite hard to find it. So yes, the world's saying fossil fuels, you can't have them. We're not going to finance them. That's potentially a big obstacle to growth and development. But just as big an obstacle to growth and development is governments that don't seem to be there in the fight to produce growth and development. And I think this gets back to politics. There are too many governments who get to power And their reason for getting to power is to extract, extract wealth for, you know, themselves, their families, their regions, maybe, if you're lucky, but not for the whole country.

Tobi;

It's an interesting observation. I'm going to ask you a speculative question and trust me, I don't want to put you in any kind of trouble. So, I mean, if you look at a set of countries that I call the tragic trio, which is the three biggest economies on the African continent, Egypt, Nigeria, South Africa, it's a useful comparison to me because they sort of went through a major transition in terms of power right around the same time. Nigeria it was 2015 when we had the first opposition leader coming to power since democratic governance started in 1999. South Africa, I think, was 2014. And I think Egypt was around the same period. If you look at that decade for all these three economies, what you see, it's not a pretty picture, unemployment is quite high. Youth unemployment particularly is through the roof. All three economies are chronically indebted. Inflation and the general macroeconomic policy environment is just a terrible mess. So I'm asking you, as someone who has been on the ground a couple of times in some of these countries, what do you think from an outsider's perspective, has gone seriously wrong with the political class in countries that can actually pull their weight on the continent if they are doing better.

David;

Sure. You mentioned, obviously, the three biggest economies on the continent. Now, first thing I should say is I can't really talk about Egypt because I don't cover it. For whatever reason, the Financial Times' definition of Africa is sub-Saharan Africa. So I cannot really talk with any legitimacy about it. But Nigeria and South Africa, you know, I've been to, I don't know, 20 times each. I've thought about them both quite hard, I suppose. And I would first say that they're just very, very different cases. The overriding factor of South Africa was the apartheid regime and the liberation from this horrendous apartheid policy, which deliberately impoverished a section of the population, the non-white section of the population, particularly the black majority. And extricating South Africa out of that is proving extraordinarily difficult. And South Africa is failing at that. And I could go into that in much more detail if you want. Nigeria, I think, is a whole different case. Nigeria never really had, well, it didn't have an apartheid system. It had a colonial oppressor: Britain; colonial occupier: Britain; then Britain left. But Nigeria doesn't have the terrible racial legacies of apartheid that South Africa suffers from.

In that sense, I actually think Nigeria starts from a better position than South Africa, albeit that South Africa had much more sophisticated some kind of world-class industries, manufacturing base, etc. Still, I would argue that the politics in South Africa is so complicated that Nigeria weirdly starts in a better place. However, one of the things that I think has gone wrong in Nigeria, and again, I don't think there'd be many Nigerians that would disagree with me, is that you discovered oil and lots of it. So you discovered oil and lots of it, but weirdly not enough. So if you take a Qatar or a Kuwait, one of these rich Gulf states, they have huge quantities of oil and very few people. So it doesn't take a kind of genius government to be able to spread that wealth kind of around, you know, to bring in foreign labor if required, et cetera.

Nigeria has a lot of oil, but not enough oil for 200 million people. If you gave all that oil wealth to each of 200 million people, you wouldn't have very much, which creates an incentive to try and get your hands on it. So it creates a perverse incentive, I would say, and the resource curse sort of starts there and did start there. And so the point of government becomes to share oil wealth, get your hands on the oil wealth, share it, share it among the political class, keep out everybody else and use your political influence to get as much of that oil wealth as possible. One obvious sort of result of that is the highly logical thing to do if you have oil is you begin to move up the value-added chain. This is what you should do if you're trying to develop any economy. So what do you do with oil? Well, you turn it into petroleum products, into the fuel you put in your car, to heating, electricity, all of this stuff. And again, you don't need me to tell you that Nigeria has not done this. It has refineries that have not worked. Now, of course, you have the Dangote Refinery, And there's a lot of hope, some hope anyway, attached to the Dangote refinery.

But in the past, what the Nigerian elite, and I can only blame the elite because they've been the ones in charge, what they've done is they've taken that oil, they've sent it abroad for somebody else to add all the value, and then they've bought it back, spending all the money that you've earned from the oil in the first place to somebody else because they've got a refinery. I mean, this is crazy, crazy policy and crazy politics. And this, I think, has been the curse of Nigeria that has informed much else. Of course, there have been many, many other problems, some of which go all the way back to colonialism and the colonial legacy. The fact that Nigeria was kind of jammed together by Britain, that it's a nation state if you draw it on a map, but it struggles to be one in reality.

And you could argue that Nigeria has been successful in creating this kind of feeling that there is such a thing as Nigeria, that we're all in it together. But you can also say that the elites, those who reach and by that, I guess I mean those who reach political power and those who enable them to reach political power, they have not really treated Nigeria as a nation because otherwise there wouldn't be 10 million kids out of school. There wouldn't be these massive disparities between different states, some with very much better health outcomes, et cetera, some with much lower levels of people in school, some with much better infrastructure, some with much worse infrastructure. That wouldn't exist to the same extent if your elites had treated the country as a real state and the purpose of the oil being to fuel that state and to fuel its development. That has not been what's happened. You've had an elite that has, in a sense, followed a colonialist model, which is to extract wealth and sometimes to send it abroad, which is why a lot of people go for their health and their education abroad, because they haven't bothered building it to the extent that they ought to have done in Nigeria itself. So these are very different stories. They may lead to the same or similar positions. You started by asking about why these three big economies have not fulfilled their potential, let's say, to put it kindly. So I think the reasons are quite different, particularly in the case of Nigeria and South Africa. But your end point is similar, if not exactly the same.

Tobi;

I want you to talk a little bit about South Africa, and especially in the last 10 years, what has gone, maybe that's not fair, but what has gone really, really wrong? I mean, to paraphrase someone I listened to during the lecture, I'd rather not say his name, is that South African elites care more about making the elite structure blacker than making South Africans wealthier. How should you think that conforms to reality?

David;

Well, that is a controversial statement. I mean, I think the ANC has become increasingly a kind of a black South African party. And it's to some extent losing some of that kind of rainbow nation, colourblind, non-racialism that was kind of, in a sense, so inspiring in 1994. So there's a couple of ways of answering that question. I mean, you said the last 10 years have been bad. I mean, I know that some people think the following: It's been 30 years since apartheid they kind of compare it to a football match - first 15 years, first half, pretty good. Second half, pretty disastrous. Lots of own goals. And that's one way of looking at it. The cutoff point is Zuma. So you have Mandela, you have Mbeki, sort of technocrat, reasonable growth that's growing at 5%. You do have a commodities boom, it's true. Then the financial crisis hits and Mbeki is dislodged by his own party, only a year before he was due to leave anyway, but still dislodged. Zuma's put in and Zuma starts the process of state capture and the real kind of erosion of some of the institutions that South Africa had maintained for those first 15 years. So that's one way of looking at it.

I think there's another really sort of, in a sense, more interesting way of looking at it, which I first read, again, in a Martin Wolf column. And he talked about the concept, which was originally applied to Brazil, actually, of Belindia. And Belindia is a combination of Belgium and India, a small, in this case, white economy. It doesn't really matter what the colors are, but a small white economy surrounded by much, much poorer black economy. That's what South Africa looked like in 1994. It had been deliberately engineered by a white racist system. So that's what you got. The question is, what policies do you have to deal with that? Because you've got two economies.

If you think about the trouble that Europe had when Europe joined and you were trying to set interest rates across Europe for different economies, for Spain and Germany, let's say. Now you've got Belgium and India. What policies do you put in place to maximise the potential of both of those? Because one of the things that you obviously try to do is you basically raid Belgium. You redistribute from Belgium to India, which is what's been done. And that's, I think, perfectly fair and a perfectly rational thing to do. You redistribute from the wealthy part of your economy to the less wealthy part of the economy. But that's not all you can do, because if that's all you can do, then eventually you're going to just impoverish Belgium and you're just going to have an impoverished country. So you can't do that. You've got to somehow turn India into Belgium. And it's not really clear how you devise policies that can do that.

You know, if you're India, it's much easier. You're a poor country and you trade, in a sense, off your poverty like China did. You know, China moved people from the countryside in China into factories in the cities. So it transformed inefficient farmers into increasingly efficient players in the global supply chains. But it did that via low wages. It's not really possible in South Africa because of the political inheritance that it's had. So one of the policies, for example, that the ANC tried was black empowerment. Which is, again, rational and completely understandable. They wanted to create a black middle class and people like Cyril Ramaphosa, who was put on various boards and given shares in various companies. He became very wealthy through that. And a black middle class was created. But you can also see how there are problems there. One is that this can lead to corruption. You know, you get those opportunities based on who you know and who you know means knowing the ANC. So you can see how that reinforces or could reinforce bad politics and cronyism. And indeed, that is exactly what's happened, unfortunately.

And second, you can see how it can lead to inefficiencies. So a well-known example was that, you know, even the airline needed to buy its planes. you know, Boeings, et cetera, through a black empowerment business. So, of course, no planes are made in South Africa. So the only way of doing that is a black company is set up to buy planes and then they sell them to South African airways with a markup 10 or 20 percent. So immediately you have an airline that's 10 or 20 percent less efficient. And that's kind of mirrored in the rest of the economy. So in trying to adjust to the hundreds of years of historical injustices that you've had, you kind of fall into policies that are going to be counterproductive and make your economy inefficient. Having said that, the ANC has also just failed flat out, right, in some policies that it also have got right. The biggest of all being education. Under apartheid, you had an education system that was deliberately tailored to keep black people poor and to limit their education so that they could work in the mines and work as domestics in people's houses. A vile system.

That was the starting point. It ought to have been really easy to improve that by leaps and bounds. And South Africa has actually put quite a lot of money into its education system. But for one reason or another, some of which I don't fully understand, to be honest, it's failed. And the education system for most people is failing. And so it's failing to transform people's opportunities via education, which would be not a simple, not a salvo either, not a panacea, but certainly it ought to be a very important part of the ANC's armory in transforming that society. And it's failed.

Tobi;

That's deep. And I agree it's a complex problem. I mean, They have an election also this year, and in Nigeria we had ours last year. From the field currently and how the political dynamics is evolving, what do you think is the hope of turning some of this around, at least for the people?

David;

Sure. Well, there are a few things. I mean, like you often say with development, well, I wouldn't start from here. I mean, it's not a particularly good place to start from. That Belindia image, I think, is quite powerful. And you can't just wish that away. That's history. That's going to take a long time to overcome. What is going to happen in this election, what is likely to happen, is that for the first time, the ANC's majority, i.e. its 50% plus of the vote, is going to be challenged. So last time it got 57.5. In previous iterations under Mbeki, for example, it got, I think, in the high 60s, certainly in the mid 60s. So the ANC sort of was dominating politics. Now, I think disillusion with the state of the country is such that that majority will be challenged. So it's possible, it's not definite, but it is possible that the ANC will fall below 50%. That opens up all sorts of possibilities, some of them more promising and some of them less promising.

So if the ANC does very, very badly, let's say it gets 40%, I think this is unlikely, but possible, then it's It may go into coalition with a party like the Economic Freedom Fighters, Julius Malema, who's a breakaway, sort of a radical breakaway. They want to nationalise the commanding heights of the economy to expropriate a lot of the land without compensation, maybe nationalise the central bank and then sort of change central bank policy so that it's much more in favour of growth distribution than in sort of tackling inflation. Now, you know, maybe this will all go brilliantly well, but experience and history tells you that that's not likely to go very well, that project, and could impoverish South Africa further. So the loss of the ANC majority, while important and necessary, I think also sort of opens up the country to danger.

I think much more likely is the ANC will get in the mid 40s or high 40s and therefore will go into coalition with some of the smaller parties. And this, I think, is where the hope lies. So you have a number of smaller parties, some of which are pretty terrible, but some of which are really good. There's a party called RISE Mzanzi, for example. A former journalist, Songeso Zibi, has formed this party. A lot of people really think that this is a good guy, progressive, forward-thinking, not attached to the ANC, not attached to the DA, which is the right-of-centre kind of party that has tended to be a very white party and therefore is really not electable in the country as a whole. So I'm not saying that RISE Mzanzi is the great hope of South Africa. I'm not saying that at all. I don't really know that much about them. What I am saying is that you can see how the breakdown of this ANC monopoly could lead to new ideas, some of which will be bad and some of which could be much more hopeful and progressive. And, you know, come the next election in five years' time, you could see some of those parties that have established themselves now growing their support base and maybe changing the policies of South Africa for the better.

But I do think that the ANC, you know, as amazing a movement as it was and as necessary a movement as it was to overthrow apartheid, after 30 years of unchallenged power, it's hardly surprising, is a sort of a pale shadow of its former self. And it'd be difficult for it to reform within without losing power, or at least having its power seriously challenged.

Tobi;

For the sake of the millions of South Africans whose lives depend on their government getting things right, I hope they do. My final question before I let you go, David. So I'm going to ask you one big question and maybe a couple of two or three more rapid fire questions. And this is a bit of a tradition on the show, which is talk to me about one big idea. It may be yours, it may be an idea of someone else, but just one idea that you are excited about, that you love very much and that you would like the world to be excited about as well. Possibly could change the world.

David;

That is a… you should have warned me about that question type. So my mind's going blank. The thing I'm thinking about is so far from what we've been discussing that I don't know that it's relevant. I mean, let me name two things and they're quite different. What is very well established, but I think very important, and I'm not trying to be trendy here, but I think the idea that if you concentrate on giving women opportunity in society that a lot follows is very promising in development.

If you look around, women kind of hold families together, their kids' health and education, they are the guardians of that. If they're empowered, given opportunities, I think huge amounts can follow. And if you want to kind of a way of unlocking growth and development, you could do a lot worse than thinking, what are we doing for women at all levels of society? This doesn't mean women in boardrooms or women in this. Of course, it means that, too. But it means policies that enable women to take control of their finances, take control of their bodies, take control of their education, take control of their destiny. If you get that right, I think an awful lot follows.

Second, totally different and something I hardly know anything about, but I keep hearing about it. It's something called eDNA. This is a way of measuring biodiversity. As far as I understand it, you take a measurement from water or soil and rather than counting the number of animals or trying to count, you know, the number of bacteria or worms or whatever it is, you kind of have a baseline of the biodiversity of an area.

And given that baseline, you can then work out, are we improving this area or are we degrading it? And it may be the kind of the GDP of the environment, let's say, a one shot measure that enables you to say, let's leave this country, this wetland, this region, this forest in a better state for the next generation than we found it. I think that could be a very powerful idea.

Tobi;

Charter cities, which is something you've written about, are something with a big potential for change, especially in the context of Africa. Do you find it promising or a fad?

David;

I'm highly skeptical. You can see where it comes from. You know, Shenzhen in southern China, you could say it was a charter city. You could say Singapore kind of acted like a charter city, Hong Kong. If that's what you mean by a charter city, then maybe. But look, if you have policies that are good, then you should roll them out to the whole country. Why should they be in some isolated little part? I don't see why you need to start from scratch. You could say, yes, we could experiment. We could try Charter City A, Charter City B, Charter City C, see which does better and then roll that out to the country as a whole. Fine. Okay. But the idea that you can get around government, you know, outsource public goods to the private sector, start totally from scratch. I am quite skeptical of that idea. I find it intriguing and I've written about it in a way that may not necessarily show my skepticism. But if you ask me, do I think it's a great hope or a fad? I lean towards the faddish end of the spectrum.

Tobi;

Senegal, Nigeria or Ghana, who has the best jollof rice?

David;

Yeah, if you make me answer that, then I'll never be allowed back in Nigeria again. So the best jollof rice I've probably ever had was in Lagos, actually. Not meaning that there's not fantastic jello fries in the other two countries, but the best one that I happened to have had was in Lagos. Kind of spicy, pretty good.

Tobi;

Okay. Generally, from your travels across Africa, where to you has the best food scenes, the best restaurants, best coffee shops?

David;

South Africa is an obvious example that has good food. I like some of the food I came across in Madagascar, in Antananarivo. And in West Africa, I'm going to say Lagos and Accra draw, just to be diplomatic. But there are certainly some very cool places in both. And I've noticed that, I mean, clearly in Lagos, Some things happened in the last few years because there's been a kind of a mushrooming of places, some of them very high end, which, you know, have limited use for me. But, you know, there is clearly some interesting stuff happening.

Tobi;

Finally, Labour or the Tories, who do you think will win the next UK general elections?

David;

Labour.

Tobi;

Thank you, David Pilling. It has been a pleasure to have you on Ideas Untrapped.

David;

Thanks, Tobi. I really enjoyed it.