Beyond “Unleashing Capitalism”: What The Economist Gets Wrong About Africa’s Green Future

By Savior Mwambwa,

A recent article by the Economist entitled The capitalist revolution Africa needs made for an interesting reading. The Economist’s analysis of “The Africa Gap” correctly identifies critical challenges facing the continent but prescribes solutions that risk repeating past policy mistakes. While market dynamism is crucial, evidence from successful development experiences shows that transformative growth requires strategic state-market partnerships – a need made even more urgent by climate change and evolving global trade regulations.

As Bishop and Payne articulate, developmental states succeed by “building markets, but then deliberately distorting them in order to pro-actively support the build-up of domestic manufacturing firms over time.” This isn’t theoretical –  As attested to by  Rwanda’s transformation of Kigali into a financial hub through careful state planning, attracting over 100 major companies since 2020.

The Global Green Transition Challenge

The EU’s upcoming Carbon Border Adjustment Mechanism (CBAM) could add up to 35% to the cost of African steel exports. Manufacturers across Ghana and Kenya express growing concerns about being locked out of European markets. Yet, opportunities exist. Morocco’s solar power facilities have created 2,400 direct jobs, while Namibia’s green hydrogen strategy demonstrates how strategic planning can position countries for future industries.

Evidence supports this approach. Analysis shows countries with higher state capacity scores demonstrate 2.3% higher annual GDP growth. Those that strategically guide their green transition attract 40% more private investment in sustainable industries.

Strategic Priorities for African States

1. Building Green Industrial Capabilities:  Ethiopia’s industrial parks have created 80,000 manufacturing jobs while incorporating renewable energy requirements – showing how state guidance can align industrialization with environmental goals.
2. Strengthening Regional Cooperation:  The African Continental Free Trade Area (AfCFTA) provides a framework for:
3. Shared renewable energy infrastructure
4. Coordinated responses to environmental regulations
5. Pooled resources for technology acquisition
6. Harmonized green standards
7. Leveraging Natural Advantages:  Zambia’s copper sector strategy needs to balance private sector dynamism with strategic state guidance, delivering a 10% increase in production while aiming to develop electric vehicle battery manufacturing capabilities. Botswana’s mineral revenue management system shows how resource wealth can support green development goals.

The Green Transition Imperative

The global green transition makes state coordination more crucial, not less. South Africa’s $8.5 billion Just Energy Transition Partnership demonstrates the complex coordination needed between state, market, and international partners. Other examples show similar promise:

• Morocco’s $9 billion investment in solar power
• Kenya’s Green Manufacturing Initiative combining tax incentives with skills development
• Tanzania’s renewable energy programs with local content requirements
• Namibia’s green hydrogen development strategy

Policy Recommendations

African states should pursue:

1. Strategic green industrial policies aligned with market forces
2. Regional integration while protecting strategic industries
3. Coordinated responses to CBAM and other global green regulations
4. Development of domestic capabilities in renewable energy
5. Investment in skills for the green economy

The data consistently shows that countries with strategic state guidance achieve:

• Higher rates of industrial upgrading
• More successful technology transfer
• Better integration into global value chains
• More resilient economic growth

This isn’t about choosing between state control and free markets. Success requires capable states that can guide market forces toward transformative, sustainable growth while ensuring social equity. The Economist’s prescription misses crucial lessons from development history: Africa’s path forward isn’t about unleashing capitalism or embracing statism. It’s about building developmental states that can help entrepreneurs, workers, and communities succeed in an increasingly complex global economy.

The focus now must be on building state capacity to guide green industrialization while ensuring inclusive growth.