Slate Money Podcast – "The Africa Edition" (October 7, 2017)

Host: Felix Salmon
Guests: Anna Szymanski, Yinka Adegoke (Africa Editor, Quartz)

Episode Overview

This special "Africa Edition" of Slate Money dives into the vast complexities and evolving stories within African business, finance, and politics. Joined by emerging markets expert Anna Szymanski and Quartz Africa editor Yinka Adegoke, host Felix Salmon guides a deep discussion covering the contrasting economies of East vs. West Africa, the impact of China's investment, innovation realities on the continent, and the intricacies of South Africa's ongoing political scandals. The episode balances a candid assessment of ongoing challenges with a recognition of the continent’s dynamism and future promise.

Key Discussion Points & Insights

1. East vs. West Africa: Lagos Vs. Nairobi

Timestamps: 01:58 – 08:13

• Regional Rivalries & Economic Models
  • Lagos (Nigeria): Largest city, "not a tourist destination" but a business hub—“Lagos is always about knowing the right people... the rewards are higher, the risks are higher.” (Yinka, 04:51)
  • Nairobi (Kenya): Smaller, more expat-friendly, capital of NGOs with “healthy tourism business” and better-managed infrastructure.
• NGOs & Entrepreneurship
  • Nairobi is viewed as expat and NGO-heavy, with tensions about local employment.
  • Grants and external funding often dominate the innovation/startup space—“you can have companies that are better at getting grants than they are at running companies.” (Anna, 06:49)
• Infrastructure and Growth
  • Kenya's government effectively implemented infrastructure plans unlike Nigeria, despite both facing corruption.

2. Innovation in Africa: Myth vs. Reality

Timestamps: 11:46 – 16:19

• Hype vs. Substance
  • Quartz’s coverage frames innovation as "new ideas" not just "tech and startups."
  • M-Pesa (Kenya’s mobile money system) is both overhyped and underappreciated—a breakthrough where “the central bank just kind of got out of the way… it just blew up.” (Yinka, 15:11)
• Barriers to Startup Growth
  • Access to financing is a major issue—unlike Silicon Valley, “there are very few opportunities for exit; the market’s not liquid enough through IPO.” (Yinka, 16:19)
  • African VCs demand proven revenue/profit, not runaway growth or "moonshots."
  • Lack of liquid and deep capital markets limits both investment and scaling.

3. The Scale of Chinese Investment in Africa

Timestamps: 17:45 – 24:57

• Depth and Nuance of Chinese Engagement
  • Chinese influence is "almost understated" and multifaceted: top-down state lending, "mid-sized companies," and individual migrants/workers.
  • Surge in Chinese infrastructure investment: “from a billion dollars a year in 2000 to like 55 billion in 2015.” (Felix, 22:29)
• Complex Effects
  • Positive: Needed infrastructure, access to cheap financing.
  • Negative: Flood of Chinese goods undercuts local manufacturing; concerns over debt dependency and "preferential" trade deals.
  • "It’s not so clear whether this will be a wash…” (Yinka, 21:34)
• Geopolitics: One Belt One Road
  • East Africa is key in China’s maritime strategy, potentially transforming the region.

4. China’s Political Influence and Implications for Democracy

Timestamps: 24:57 – 30:19

• Spread of Chinese Governance Models
  • Countries like Rwanda and Ethiopia “well run from the top” but lacking local entrepreneurship and open democracy.
  • China’s single-party capitalist system seen as a model by some African leaders: “Everyone’s looking at Rwanda... everything’s kind of working well...” (Yinka, 26:15)
• Democracy or Authoritarian Growth?
  • China may make Africa “richer but less democratic.” (Felix, 28:15)
  • Fate depends on local context – “It’s always going to be on a country-by-country basis.” (Yinka, 28:35)

5. South Africa’s Scandal—State Capture, Corruption, and Democracy

Timestamps: 30:19 – 45:03

• South Africa Named ‘Surprisingly Democratic’
  • Despite widespread corruption, mechanisms like an independent anti-corruption ombudsman expose wrongdoing.
• The Gupta Scandal & PR Firm Bell Pottinger
  • Indian immigrant family, the Guptas, gained undue influence under President Zuma, allegedly “appointing ministers” and misappropriating state funds.
  • Bell Pottinger, a UK PR firm, engineered divisive "white monopoly capital" rhetoric but was disgraced and dissolved as a result.
• Fallout for Multinationals
  • KPMG and McKinsey ensnared by association, impacting reputations and foreign investment.
• Persistent Inequality
  • Visible, historical racial divides—"born frees" question why poverty persists.
  • “The people who were suffering under apartheid… are still getting nowhere.” (Felix, 39:25)
  • ANC, the ruling party, has failed to significantly address these economic gaps.

6. Challenges and Hope—Africa’s Future

Timestamps: 43:16 – 45:54

• Smartphone Penetration
  • Massive increase in smartphone use seen as transformative for remittances, payments, and information access: “That’s really going to have an impact.” (Yinka, 43:20)
• Demographics
  • Youthful population presents both a “demographic dividend” and a challenge regarding job creation.
  • Niger’s population growth—from 3.4 million in 1960 to a projected 68 million—shows demographic trends may outpace resources: “You're going to have a lot of…” (Yinka, 47:36)
• Development Indicators
  • Gains in education, vaccination, and health bode well for the future.

Notable Quotes & Memorable Moments

• On African Innovation:
  “When you don't have the long legacy of big institutions and big companies, it's a blank sheet of paper. So people are experimenting all the time and that's always really interesting and exciting.” (Yinka, 12:18)

• On Lagos vs. Nairobi:
  “Lagos is where the real sort of economic engine of the continent is.” (Felix, 06:59)

• On Chinese Investment:
  “Chinese influence is almost understated… the relationship between China and Africa is going deeper. It’s coming from the top, mid-sized companies, and individuals trying their luck.” (Yinka, 18:48)

• On Social Impact Startups in Kenya:
  “If you're solely focused on social impact investing and that's the only people who can really get funding, that is going to limit your potential.” (Anna, 09:38)

• On Corruption and Development:
  “As much as anybody else. But I often say… is it just corruption? It just seems there's just huge amounts of incompetence.” (Yinka, 26:47)

• On Inequality in South Africa:
  “The Brits can come in, the Nigerians can come in… All come in and make lots of money. And the people who were suffering under apartheid and had no money at all are still getting nowhere.” (Felix, 39:25)

• Smartphones and a Young Continent:
  “Smartphone penetration… is only just taken off. And that's really going to have an impact on everything from remittances, ease of remittances to payments, to access to information… as the devices get cheaper…” (Yinka, 43:20)

Important Segment Timestamps

• Regional Contrasts: 01:58 – 08:13
• Innovation Hype vs. Reality: 11:46 – 16:19
• Chinese Investment's Scale: 17:45 – 24:57
• Democracy vs. Development Models: 24:57 – 30:19
• South Africa’s Scandal: 30:19 – 45:03
• Closing Reflections/Hopeful Trends: 43:16 – 45:54

Tone

The conversation is candid, nuanced, informed, and unafraid to highlight uncomfortable truths. The hosts deploy humor and banter (“Lagos is on nobody’s tourist list,” “Africa is the country of the future and always will be!”) but maintain respect for the complex realities facing the continent.

Summary in a Sentence

A fast-moving, insightful examination of Africa’s enormous economic and political diversity, from Lagos’s entrepreneurial drive to Chinese influence and the intractable challenges of governance, ending on the promise of a young, tech-savvy population poised for change.