Africa’s development story is often told through politics: coups, corruption, ethnic conflict, and weak institutions. Those issues matter, but they do not explain the whole picture. To understand why Africa’s development has taken so long, we have to start with something more basic: population density, disease, and the difficulty of building across such a vast continent.
In 1960, Africa had fewer than 10 people per square kilometre. That was roughly the same population density Europe had around the year 1500. Africa is also enormous. China, India, the United States, and Europe could all fit inside the continent, with room left over. For much of its history, Africa was not just poor. It was vast and sparsely populated.
All this matters because markets need people close enough together to trade, work, build businesses, and pay taxes. When populations are thinly spread across a huge territory, it becomes much harder to justify roads, railways, schools, hospitals, and sewage systems. The cost per person is simply too high.
Africa also faced a disease burden unlike any other major region, from malaria and sleeping sickness to hookworm and extremely high child mortality. As late as the early twentieth century, some of the largest African cities had only around 20,000 people.
Even farming was harder than outsiders often understand. In Tanzania, for example, a large share of smallholder crops was historically lost to elephants. The elephant example may sound unusual, but it makes a broader point: many of the basic conditions that helped other regions build agricultural surplus, cities, and modern economies were either missing or much harder to achieve in Africa.
That is why Joe Studwell, author of “How Africa Works”, believes the old story is incomplete. Africa’s slow development was not simply the result of bad leaders or bad policy. It was also shaped by geography, disease, low population density, and the long struggle to build markets across a continent of extraordinary scale.
How Low-Budget Colonialism Left African States Weak
Colonialism did not affect every region in the same way. In parts of Asia, colonial rule helped create more centralized systems of government, partly because there were already large cities and dense populations where taxes could be collected.
Africa was different. Because populations were much more spread out, colonial governments struggled to raise enough money to build the basic systems needed for development. Instead of trying to govern entire countries properly, they often took the cheapest route available.
They controlled the capital city and the surrounding area, then ruled much of the rest through local chiefs. The result was a thin form of government. Colonial authorities could extract labour, collect some money, and keep order where necessary, but they did not build strong public institutions across the whole country. Large parts of the population remained outside the reach of schools, hospitals, roads and effective administration.
This matters because many African states inherited that weak structure at independence. Governments were often strongest in the capital and much weaker in rural areas. That made it harder to implement policies across the country, especially in areas like agriculture, where success depends on reaching farmers far from the centre of power.
Studwell’s point is not that colonialism explains everything. It is that low population density shaped the kind of colonialism Africa received, and that form of colonialism left behind states that were often too thin and underbuilt to drive development at scale.
Why Africa’s Growth Story Looks Different Today
The old picture has started to change. Africa’s population has grown from about 220 million people at the end of the Second World War to around 1.5 billion today. By the end of this century, it is projected to reach about 4 billion, or roughly 40% of the world’s population.
For Studwell, this matters because population density changes what becomes possible. More people living closer together makes it easier to build markets, justify infrastructure, raise taxes and create demand for goods and services.
One area where this is already visible is agriculture. Since 2000, agricultural value added in Africa has grown by more than 4% a year, the highest rate of any region in the world. As populations have grown and incomes have risen, even modestly, demand for food has increased sharply.
That has also helped create a bigger market for food processing. Studwell points out that many of these businesses are African-owned private companies, often operating across several countries. In other words, this is not just a story about foreign capital arriving from outside. A lot of the activity is being built locally.
Education is another part of the shift. The World Bank has argued that no region has expanded its public education system as quickly or as effectively as Africa has over the past several decades. That does not fit the usual story outsiders tell about the continent, but it matters for what comes next.
Still, the change should not be overstated. Manufacturing remains underdeveloped in much of sub-Saharan Africa, and not every government has treated it as a serious priority. Capital markets are also still shallow.
The demographic base is becoming more supportive of development, but turning that into deeper markets, stronger industries and investable companies will take time.
The Resource Story Investors Often Get Wrong
When many outsiders think about Africa’s economic potential, they often start with natural resources like oil, metals, and mining.
Studwell argues that this view is misleading. Africa does have resources, but not in the way many foreign investors assume. Across sub-Saharan Africa, the value of minerals and hydrocarbons per person is still relatively low compared with a country like the United States.
So why does Africa look so resource-heavy from the outside? The answer is simple: for a long time, mining and oil were among the few major economic activities outsiders could clearly see. That made resources look like the whole story, when in reality they were only the most visible part of a much thinner economic base.
Studwell is also skeptical that minerals alone can drive broad development. Mining does not create enough jobs by itself. It becomes more useful when countries can process minerals locally, add value, and create more employment around them.
Botswana is the strongest positive example of this. After independence, it treated diamond wealth as a national resource rather than allowing it to belong only to particular regions or groups. The government then used the proceeds to build roads, schools, and a health system.
But even Botswana shows the limits of relying on resources. Its growth numbers were impressive, but it did not build much manufacturing capacity and did not do enough for smallholder agriculture. That left the country with high inequality despite decades of strong GDP growth.
In other countries, resources have created another problem: Dutch disease. When oil or mineral exports bring in a lot of foreign currency, the exchange rate can rise. That makes it harder for other sectors, such as agriculture and manufacturing, to compete abroad.
So the point is not that resources do not matter. They do. But in Studwell’s view, they are not enough to explain Africa’s future. The bigger question is whether governments can use them carefully, process more locally, and avoid letting resources crowd out the industries that create broader development.
Is Now the Time to Invest?
For investors, the obvious question is whether Africa’s long-term development story is already investable.
Studwell’s answer is cautious. He argues that Africa should be taken seriously, especially given the scale of its demographic change. A continent moving from 1.5 billion people today to a projected 4 billion by the end of the century cannot remain peripheral to the global economy.
But taking Africa seriously is not the same as rushing to allocate capital. Capital markets are still at an early stage. The range of listed companies is also limited. There is more activity in venture capital and private equity, but these areas as growing from a very low base. They may be interesting, but they also require far more local knowledge than a simple public-market allocation.
Africa right now can be compared to China in the 1990s. Many investors and multinationals rushed in before they really understood the terrain. The ones who did better were often the ones who put someone on the ground early, studied the market, built relationships and waited until the opportunity became clearer.
The serious investor’s task is to understand the countries, the sectors, the politics, the companies and the people before the consensus arrives. Africa may become one of the defining development stories of the next several decades, but the best preparation now may be patience, presence, and learning.
DISCLAIMER: This article is based on a conversation from Top Traders Unplugged and reflects themes, ideas, and perspectives discussed during the episode. The views expressed are those of the guest and participants in the conversation and should not be interpreted as investment advice or as the official views of Top Traders Unplugged.
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