1 Masoud Kibwana’s Unity (100x80cm)

Authoritarian regimes have it tough. You seize power promising stability, dignity, prosperity. The people were sick of self-serving politicians talking but not delivering. “You can't eat freedom” they cried. They need jobs, roads, electricity. Give me control, you say, and I'll get things done. No gridlock. No opposition parties slowing everything down. Just results.

But then the complaining starts. Human rights campaigners start speaking out and there are earnest handwringing articles appearing in The Guardian. Before you know it, George Clooney has taken a break from his Nespresso commercials to tour a refugee camp mysteriously full of your citizens. But what they don’t understand is that you are delivering! You are bringing jobs and growth and the path to modernity! You can’t make an omelette without breaking a few eggs, George!

Well, maybe you can. With the rise of China and before that Taiwan, South Korea, and Singapore – all under authoritarian regimes – the dictators and wannabe dictators claimed to have something to hang their hat on. The authoritarians might cede the field regarding human rights, but when considering outcomes purely in terms of economic growth, they thought they were on safer ground. However, the weight of economic research is proving otherwise.

The ballot box, not a black box

From its origins in the 1950s development economics has been arguing about the best system of government for economic growth. Fashions and fads waxed and waned but in the 2000s and 2010s a clear picture was emerging. Democracy, whilst often noisy, messy, or gridlocked, was delivering more economic growth more consistently than authoritarian regimes. A democratic turn reduced economic volatility which allowed gains to accrue steadily. Grier and Munger’s work from 2010 showed that systems which allow peaceful leadership turnover, avoid significant growth penalty that often accompanies an unplanned leadership transition. Numerous other papers found similar: the ability to remove leaders is an economic asset, not a human rights luxury. While economic growth may feel like it’s slowed by bureaucratic transitions, democracy’s sustained consistent growth outweighs the instability that ensues following the flashiness of an authoritarian “breaking a few eggs” to get things done.

Future Nobel Laureates,2 Daron Acemoglu and James A. Robinson along with co-authors Suresh Naidu and Pascual Restrepo didn’t bury the lede with their 2019 paper Democracy Does Cause Growth. Examining the period 1960-2010, they conclude that “…a country that transitions from nondemocracy to democracy achieves about 20 percent higher GDP per capita in the next 25 years than a country that remains a nondemocracy” (see figure 1). Papaioannou and Siourounis a decade earlier found the same. Masaki and van de Walle concur and find that the longer a country remains democratic, the better the result —democracy as a procedure not a goal in and of itself. Sustained democracy increases enduring and durable factors of overall prosperity: strengthened investment, increased schooling, and improved public good provision.

The Panda in the Room

So, case closed for democracy. Except… China. For decades, China served as the authoritarian apologists’ trump card: one-party rule, no elections, limited personal freedoms, and world beating growth. The comparison with democratic India, the other Asian giant with a billion plus people, writes itself. But that is to misunderstand what democracy is – or any system of government, for that matter. Democracy is not a guarantee of riches just as authoritarianism is not a guarantee of economic turmoil. A system of government is about how policies and decisions are made. The lessons from the papers mentioned above is that democracies, on average, made more decisions that led to growth and were more often able to adjust course when things were going wrong. But authoritarian regimes can and do get things right too.

And so, in 1978, just two years after Mao Zedong’s death, at the Third Plenum of the 11th Central Committee, the Chinese Communist Party decided to start reforming China’s economic system. The first Special Economic Zones were born, capitalism was embraced – first with caution and then with abandon – and the Chinese Communist Party became communist in name only.

In 1991 India began their own similar reforms. For both China and India, the process of reforming their statist economies took years to bear fruit (see figure 2). Whilst it was unfortunate for Indians that the reforms didn’t start sooner, this delay does not teach us much about democracy that we did not already know – it’s not perfect. But how China’s government made decisions then versus now, is potentially much more interesting.

Some are more equal than others

Just like unhappy families, no two autocratic regimes are alike. Recent work by Blattman et al. breaks down autocracy into different types and concludes that the real economic growth killer is personalism: when government systems are more synonymous with one leader rather than the ideological foundation upon which a system operates. Personalist leaders fear rivals more than recessions. They suffer from higher isolation, lower private investment, and greater risk of conflict, which makes it difficult for productivity and growth to flourish. These systems consistently grow slower than both democracies and more institutionalized autocracies. Call it the personalism penalty.

In the post-Mao era, the CCP had relatively strong internal constraints such as collective leadership, term limits, and a mandatory retirement age. Those constraints have been weakened or entirely removed under Xi Jinping. But whether these changes lead to declining growth rates or even an economic reversal due to an unplanned leadership change will be one of the defining questions of the next 15 years. If Blattman and colleagues are correct, the days of China’s growth miracle being the go-to fig leaf of choice for wannabe strongmen around the world may be numbered.

Gen Z pro-democracy movements and protests have recently touched many countries around the world. These movements echo earlier protest waves from the Arab Spring to the post-World War II Independence movements. There is a consistent desire for democracy, and through the decades people from all continents have sought it out. Yet frustration around democratic gridlock and serve-serving politicians persists; it’s not for nothing the phrase “you can’t eat freedom” still resonates. Authoritarians have long harnessed this frustration and used it for their own ends. And they may very well believe that they know what needs to be done. But if a country’s leaders – be they authoritarian or otherwise – truly want the best for their citizens, the most reliable method is to provide them freedom at the ballot box.

Fernand Léger’s The City 1

Build something but be ok if you don’t achieve much might sound pretty uninspiring but bear with us. Export-led growth is really the holy grail of development economics. The East Asian Tigers, post-Communist Eastern Europe, and latterly China, inter alia have all transformed their economies and societies by making and selling things to the world. Every low- and middle- income country (LMIC) wants to join that list.

Here is the good news: according to Jonathan Mazumdar of Growth Teams, the transformation of an export orientated sector happens much more commonly than you might think. That’s the first lesson from Growth Teams’ recently launched Export Boom Atlas.

But the second lesson is even more encouraging; aiming for export-led growth is actually a free lunch. The basket of policy prescriptions that led to these export booms are good in themselves, irrespective of their export promoting power. This isn’t the case of the means justifying the ends; the means will help exporters and domestic orientated firms alike. Aim for an export boom. If such a boom strikes, amazing. But even if it doesn’t, you still win.

Great Expectations

The Export Boom Atlas contains 82 case studies, from across LMICs, of a sector that has shown transformational growth since 1995. The breadth of examples is wide. These are stories of Honduran electronics and Cambodian bicycles. And it is quite refreshing to consider who is missing from the atlas; no Japan, no South Korea, no Taiwan, or even China.

The depth of research done by Growth Teams is impressive. More than just a catalogue of what boomed where, they provide a full case study of each example including what the policy lessons were. Putting the various lessons together gives you a list of pretty sensible ideas. But more than that, implementing the majority of these sensible ideas is no wasted effort if an anchor investor never arrives or global demand for your product doesn’t surge. The policies and reforms will help regardless.

A Tale of Two Economies

The export economy is not separate from the domestic economy. Well-functioning ports facilitate smoother exports with less cost to exporters. Obviously enough they serve a similar function for goods coming into the country. The road or railway that was built to the port to ship those avocadoes out is just as useful for transporting imported inputs to domestic manufacturers. Streamlining permits through digitization of an application process will help whether or not the permit is for an exporter or someone selling to the local market. Technical colleges that produced skilled graduates hoping to get a job with the high-profile firm that exports car parts will also produce skilled graduates that work at the juice factory that supplies corner stores. What is good for the goose is quite likely excellent for the gander.

The Export Boom Atlas even shows us this concept in the export data as well. Two-thirds of the booms—fully 54 of 82 cases—occurred in countries that had already experienced a boom in a different sector. It is of course possible that the Vietnamese government laid out meticulous, independent plans for their fish fillets, tires, office machinery parts, shoes, radio and TV transmission devices, diamonds, car parts, iron, copper, and service industries that all gloriously boomed one after another. But it is much more likely that Đổi Mới reforms affected all these industries and many more. The first boom might be the hardest. But others seem likely to follow.

Hard Times

But budding industrial policy nationalists beware. The optimistic framing of ‘hey look, everything helps!’ is not an excuse to immediately get the cheque book out and start drawing up semi-conductor factory plans. Rather, it’s a call for restraint. LMICs just don’t have enough money. And this won’t change until after (multiple) export booms, and probably a few busts, have come and gone. Therefore, policymakers must focus on the policies that will have the widest applicability. Couching the reform in the language of export booms or export-led development may help rally the requisite political support, but the key part is the doing, rather than the exporting. And if a tax break or incentive is needed to land a particular whale investor, make sure to prepare the sticks as well as the carrots. South Korea’s industrial policy is the canonical example of this sort of ‘export discipline’. Access to credit and tariff protection was conditional on measurable performance (notably export performance) with the state retaining the option to withdraw support from non-performing firms. Just lavishing support onto your favourite industrial sector or demarking an Export Processing Zones does not an Export Boom make.

Creating an economy that has a lot of exports is undoubtedly a good thing for the government of a LMIC to aspire to. And the higher value those exports the better. The Export Boom Atlas shows us that this happens more often, in more places, and in more sectors than might first have seemed likely. Governments, policymakers, development economists and basically anyone who wishes to see the populations of more countries permanently move out of poverty should continue to aim for more, and more valuable, exports. They should do so even more once they realise something surprising: it doesn’t even matter if those countries end up exporting anything at all.

Ntiro, Sam Joseph. Palm Tree. Oil on canvas, Lot 2047. Potomack Company, 8 Oct. 2024, Alexandria, VA, www.potomackcompany.com

In October this year we welcomed five Sustainable Growth Fellows to Tanzania. The 24-month program places fellows in impact-driven businesses across Tanzania and beyond. We aim to provide our fellows with a hands-on experience, contributing to sustainable economic growth while tackling real-world challenges.

The new fellows are already contributing to high-impact work in various parts of the country. They bring a range of distinct skills and experiences and are set to play an integral role in supporting the operations and growth of a diverse range of businesses.

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Cherotich Faith

Cherotich, from Kenya, is a data science and AI developer with a bachelor’s degree in Business Innovation Technology from Jomo Kenyatta University of Agriculture and Technology. Her work focuses on building data and AI solutions that advance technology adoption and support sustainable development. She has developed scalable AI models, including predictive tools for financial inclusion in East Africa. She is certified in Data Science and AI through KIEP-SKIES x World Bank and Moringa School.

Cherotich has joined Tanganyika Blue in Western Tanzania as a Digitalization Developer. Tanganyika Blue is Tanzania’s first commercial native species aquaculture farm on Lake Tanganyika, the world’s second-largest freshwater lake by volume. In partnership with SUSTAIN, a Swiss organization developing a sustainable aquaculture value chain in East Africa, Cherotich will support the modernization and scaling of digital systems, strengthening data infrastructure, operational visibility, and technological capabilities across both companies.

Divyam Gautam

Divyam, originally from India, comes from a family of foresters and has a deep‐rooted passion for biodiversity conservation and nature restoration. He holds a bachelor’s degree in Finance and Entrepreneurship from O.P. Jindal Global University. Divyam has previously worked with the UNDP Nature Hub in Türkiye, contributing to global biodiversity finance and ecosystem services policy research.

During his fellowship, Divyam will spend three months with Dark Earth Carbon, gaining hands-on experience with the financial and operational aspects of a biochar production facility. He will then join Farmers for Forests in Pune, India, a hybrid social enterprise which financially supports farmers to protect existing forests, undertake reforestation, and transition to agroforestry on degraded agricultural land. Divyam will establish their biochar operations from the ground-up while supporting their agroforestry financing initiatives.

Josef Horwath

Josef is an American Brazilian holding dual-master’s degrees in Economics and International Affairs from SOAS University of London and Johns Hopkins SAIS. He has previous work experience in sustainability consulting in Italy as well as advising on investment projects at the European Bank for Reconstruction and Development.

Josef has joined Dark Earth Carbon as a business development executive at the cusp of the inauguration of their new facility, which will more than triple their production of biochar. He will be working in strategy and operations, developing methods to connect the biochar product with hundreds of smallholder farmers in the region. In his free time, Josef loves to play football and has recently joined training sessions with the company-sponsored team, Dark Earth FC.

Camille Ryder

Camille, from the United States, holds a first-class MA in International Relations from the University of St Andrews where she was also a Music scholar. During her degree, she conducted research on the global influence of community-based HIV/AIDS surveillance innovation in East Africa. Camille has experience living in Tanzania as a Laidlaw Scholar, where she completed a research project on the equitable impact of music education in Dar es Salaam and Scotland.

Camille will initially help Dark Earth Carbon, Upendo Honey, Pure Joy Honey, and Tanganyika Blue, hone their communications and marketing strategies before transitioning to pioneer new strategy and operations within these companies. Camille enjoys studying how the arts and community resilience shape collective-action approaches to international relations. 

Monica Salsano

Monica is a food application specialist from Southern Italy holding a master’s degree in Food Science & Technology from the University of Parma. She holds a variety of professional certifications in quality and food safety management systems. Monica has international experience across Europe, Africa, and Latin America. Recently in Finland, Monica helped develop sustainable alternatives to cocoa butter and palm oil for industrial applications.

Monica has joined Upendo Honey and Tanganyika Blue as a food technologist, where she will support projects in product design, processing improvements, and quality assurance. Through this role, she aims to advance sustainable food innovation while contributing to local economic growth.

Curious and globally minded, Monica enjoys exploring new cultures and understanding how food technology can generate value for societies and economies. In her free time, she loves cooking, traveling, and enjoying nature.

Our second cohort of fellows represent an ambitious and diverse group that is deeply committed to advancing sustainable economic growth across various sectors. Their placements reflect GPI’s mission to pair high-potential talent with enterprises that are driving inclusive growth, technological innovation, and environmental resilience. As the fellows begin their work across Tanzania and India, we look forward to supporting their professional development and witnessing the lasting impact they will create alongside our partner organizations.

We’re certain you’ll be hearing from our fellows in GPI articles soon and can’t wait to see what fresh ideas our fellows bring to the table.

Artwork by Elie Hatungimana, Stand With Me, 2023.

Editor’s note: It’s been a while between articles here at The GPI so thanks for bearing with us! We have been busy welcoming our latest Sustainable Growth Fellows and we’ll be posting more about them shortly. But hopefully normal service will now be resumed.

Ashura Amini knew she was in trouble. She had already miscarried once and when the bleeding started, she feared the worst. The nearest clinic was a two-hour motorbike ride away and the nearest hospital a further day’s travel in the old, cramped, shared minivan that passed for public transport. She grabbed a few essentials and headed for the clinic. Unfortunately, she needed more care than they could provide so she continued onwards to the hospital. Less than halfway through the journey she knew she had miscarried again. With an almost unimaginable stoicism, Ashura spent another seven hours on the bus until she reached the hospital in town. By the time she arrived, there was, predictably, nothing they could do. Ashura spent three days in town at her sister’s house before she returned to her village.

This took place in 2021. Ashura lived then and continues to live now in a remote village in Western Tanzania. The village is in the foothills of the Mahale Mountains National Park and is stunningly beautiful. Untouched forest rises from the shores of Lake Tanganyika and stretches unbroken for several hundred square kilometres. It is one of just two or three places on earth where chimpanzees and lions coexist. But the lack of even a good dirt road to her village of several hundred people made the journey to the hospital long, slow, uncomfortable, and ultimately heartbreaking. The town hospital is just over 200km away so the journey should not have taken anything like such a long time. Fortunately, in 2022, a new all-weather road was built to Ashura’s village.

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The Good

This road cut the journey to the hospital to just four hours. Whilst it’s impossible to know if a four-hour journey would have averted Ashura’s miscarriage, many other more commonplace activities have been greatly improved. The new road has opened opportunities for commerce, education, and of course health care. This is the reliable Good of roads and development; they transform remote lives like few other things. When Ethiopia upgraded its rural road network between 2012 and 2016, household consumption increased by 16% (with higher gains in more remote areas). In Nigeria in the mid-2000s, a 10% reduction in transport costs increased local GDP by 5.4% and cut poverty by 2.6%. The pattern is consistent across Africa: better roads mean real gains in income and health outcomes.

It’s not hard to see how this works. Roads lower the transaction costs that strangle rural economies. Tanzanian farmers who lack road access face input prices 40-55% higher than their connected compatriots meaning they rarely farm more than for subsistence. Other researchers have found that a 10% reduction in travel time to market increases crop production 23%. Roads open markets, enable women to work outside the home, get children to school, and give families a way out of subsistence farming. They are, quite simply, the path along which rural poverty recedes.

The new road means a lot to the people of Ashura’s village. But, according to a village elder it also means ‘that’s the end of the forest’.

The Bad

If roads bring commerce, education, and health care, they also reliably bring deforestation. Nearly 30% of all tropical forest loss between 2001 and 2020 occurred less than one kilometre from a road. Smaller secondary roads like the one to Ashura’s village are bigger deforestation vectors than primary roads. In the tropical forests of the Congo Basin, secondary roads cause more damage than primary roads. Again, the mechanism is clear; the same road that carries a farmer and her goods to the market opens the forest to the chainsaw and in turn carries the timber to buyers.

Protected areas provide at best, some limited protection from this process. Researchers document expansion into parks, illegal logging, increased poaching of high-value species, and escalating conflict between humans and wildlife in road-adjacent zones. The calculus is brutal it’s a bare faced trade-off; a village gains a market connection worth hundreds of dollars per household per year; a forest loses centuries of carbon storage, wildlife habitat, and the ecosystem services that regulate rainfall and prevent catastrophic erosion. For Tanzania’s Mahale Mountains, where Ashura’s harrowing story began, the new road brought hope. But the same route that cut hospital journeys has also opened a corridor which now endangers the wildlife and forest that surround her home.

The double-edge sword of trading human development for environmental damage at least comes with real positive outcomes for the world’s poorest people. But the concluding component of this tarmac triptych is just irredeemably bad. African roads are shockingly deadly.

The Ugly

Prepare for a barrage of depressing statistics. Africa is home to 20% of global road deaths but only 3% of its road vehicles. Between 2010 and 2021 Africa’s road deaths increased by 17% whilst globally deaths fell by 5%. 300,000 people die on African roads every year; that’s the entire population of Cardiff or Reykjavik wiped out. Every. Single. Year. In reality, those cities thankfully only have five or six people die each year. Combined. Not a single African country has laws meeting best-practice standards for the five key road safety behavioural risk factors: speeding, drink driving, helmet use, seatbelts, and child restraints. But laws on the books will only help if enforcement is consistent enough to change norms.

The roads that move people and goods (legally or illicitly) and help people work their way out of poverty are also a public health catastrophe.

Roads are the poster child for the trade-offs inherent in the developing world. It is abhorrent to think we should accept what happened to Ashura as just part of the how the world is. But helping her and those in similar situations will come at a cost to our shared natural world. Road deaths are declining globally due to the hundreds of minor systematic improvements made over the last 80 years of mass road travel; road-building standards, ambulance services, reflective signage, blood banks, working traffic lights. Up-front money aside, building roads is easy and a precondition of ending poverty. But building the ‘soft’ systems around the ‘hard’ infrastructure that are needed to protect the nature and increasingly, the road users themselves is much harder. Let’s hope it doesn’t take 80 years.

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If you’ve been thinking about applying to the GPI Sustainable Growth Fellowship, now is the time. Applications close on 15th July 2025.

The Sustainable Growth Fellowship is our flagship program placing talented professionals inside high-impact Tanzanian businesses for 12 to 24 months. Fellows work directly with companies tackling real-world challenges in sustainable broad-based economic growth – from building cocoa processing facilities and scaling carbon sequestration initiatives to strengthening honey value chains and conserving biodiversity.

Whether you’re a recent graduate, an early-career professional, or someone seeking to pivot into meaningful, systems-level work, the fellowship offers a rare opportunity to take on roles with genuine responsibility and purpose.

Read the full fellowship details and how to apply here.

Applications close on 15th July, with Fellows arriving in Tanzania in September. If this sounds like your next chapter – or someone you know– we encourage you to apply!

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We recently wrote a fairly pessimistic take on the potential for the business training industry to materially affect business performance in LMICs. Whilst we aren’t yet ready to reverse our position, we did come across these interesting results from some RCTs in the UK:

https://www.innovationgrowthlab.org/blog/unpicking-the-productivity-puzzle-what-have-we-learnt-from-the-uks-business-basics-programme

Obviously, it’s not exactly apples with apples when looking at a study from the UK and thinking about LMICs. And also there is just a hint of marking your own homework (the implementing partner seems also be the author of the evaluation report) but it was a thorough evaluation with numerous treatment arms. Worthy ideas do abound; lucky really as the UK needs them as much as anyone.

On January 24^th, hundreds of organizations around the world received a Stop Work Order from USAID instructing them to pause all USAID funded or USAID related operations. About a month later these orders became full blown contract terminations. USAID as we knew it had ceased to exist.

No one really knows what will replace USAID, if indeed it will be anything. But Unlock Aid has done more thinking than most about Day Zero for the aid world. Along with the usual criticisms of waste and administrative bloat, Unlock Aid has long championed ideas that the US policy world now groups under the “Abundance Agenda”—breaking bureaucratic bottlenecks, reforming procurement, unlocking investment in innovation, and reducing dependence on entrenched contractors. For the sake of the world’s poor, it’s an agenda worth considering.

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Unlock Aid: USAID’s Bête Noire (you know, when USAID existed)

Unlock Aid emerged in 2021 determined to “rebuild public institutions for the 21st century.” From the outset it positioned itself against USAID’s contractor heavy model. USAID was the beating heart of the industrial aid complex. The alliteratively named Beltway Bandits and other international contractors capturing 80-90% of the agency’s budget. Local implementors made do with crumbs from the table. USAID officials often bristled at Unlock Aid’s tactics and critiques and the group quickly became something of a bête noire for the agency.

But Unlock Aid’s founders are no Rand Paulian small government zealots who look to slash budgets for the sake of ideological purity. Rather they argue that USAID has shortchanged the world’s poor by adherence to rules that shut out innovators, kept communities away from decision making, and paid Washington salaries instead of funding local solutions. Long before billionaires entertained themselves over a weekend by feeding government departments into a woodchipper, Unlock Aid was agitating for more humane change.

The Abundance Agenda and Unlock Aid

At its core Unlock Aid wants more for the world’s poor. More results, more decision-making power, more progress, but not necessarily more aid funding. Those aims pre-date the recent popularisation of the Abundance Agenda but overlap neatly with the main critiques as they have recently emerged in US policy debates. Abundance thinking has been promoted by writers such as Matt Yglesias, think-tanks like Stand Together, and more recently by the New York Times Best Seller Abundance written by Derek Thompson, a journalist at The Atlantic, and NYT omnipresent columnist Ezra Klein. The core idea of the movement: stop fighting over a fixed pie of resources and create more pie(s)! Remove chokepoints so societies can create more—more housing, energy, health care, and growth—through lighter regulation and faster innovation.

Abundance, the book and the movement, lists the ills of American life and plots a course out of zero-sum politics and resource fights. Unlock Aid has long been singing from this hymn sheet. Its homepage pledges to build a system “on the principles of abundance … decentralizing decision-making power and resources to communities closest to the hardest problems.” Their 2023 listening tour manifesto repeats that a “vision of abundance” should anchor any redesigned US development model. Unlikely that Musk was reading this in 2023, but redesigned the US development model he has nevertheless.

The links to abundance are more than rhetorical flourishes. The first ever policy paper in 2021 talked about how procurement red tape stifled progress, argued for increases in focus on innovation to create more public goods, and challenged decision makers to move away from over-reliance on legacy government contractors. They got these views in Foreign Policy in May of the same year and when they aren’t low key trolling Marco Rubio with ads in his hometown paper, Unlock Aid continue to publish ideas and policy platforms. A few choice abundance inflected themes recur:

• Moving “Beyond Aid” so the U.S. invests globally to expand supply. Unlock Aid isn’t looking for more money necessarily. Just moving beyond grants towards growth capital, echoing abundance writers who emphasize market-scale solutions. Their roadmap pushes compacts, co-investments, unlocking diaspora remittances (which dwarf official development assistance), and leveraging innovative finance instead of the classic project, aid-driven approach.

• Cutting red tape and increasing state capacity. This mirrors US domestic abundance calls for permitting reform. Unlock Aid’s blueprint would let local firms bypass thousand-page solicitations via short concept notes, for example. Many of Unlock Aid’s proposals also deal with ways to enhance government agencies’ abilities to better respond to challenges, such as by recruiting a new generation of talent into federal agencies.

• Localization. A shared insistence on decision making where problems occur and thinking critically about solutions that consider who is the long-term “payor,” whether it be via markets or host country governments rather than perpetual reliance on U.S. taxpayers and U.S. aid industry contractors.

• Embracing innovation. Both the US domestic abundance movement and Unlock Aid call for ramped up public investments in innovation, both to propel the impact of existing, proven social innovators, and to unlock new science and technology discoveries such as to curb disease outbreaks and increase global food security.

Unlock Aid is an America-focused organization that works expressly through pulling and pushing on the (somewhat rubbery) levers of American politics and policy. They hope their platform has enough pro-small government pro-private sector fare for the Republicans and more than enough cosmopolitan internationalism for the Democrats.

The king is dead, long live the king

For too long African development, as viewed from the US and Europe, was focused on aid. The newly emerging abundance agenda is a step away from this mindset. Its very nature is about creating more. Something the private sector – and capitalism writ large – is very comfortable with. Charting a new abundance infused course where once there were DC-based bureaucrats contracting out four-year fixed programs to DC-based consultants is an agenda The GPI can get behind. Governments of Low- and Middle-Income Countries Just Don’t Have Enough Money. Only tax revenues, not aid from USAID or anyone, will be able to be enough to change that.

The implosion of USAID will hurt where aid dollars were overrepresented. But aid was never going to be the rising tide that lifted whole countries. With a bit of creativity and realizing that aid is, at best, a catalyst or a force multiplier for local solutions, the USAID aid apocalypse could clear the way for something much better. Or it might just be a humanitarian disaster zone and a generational stain on the US’s reputation. Fingers crossed that Unlock Aid—with their ideas, verve, and desire to see the welfare of the world’s poor improve as their sole focus—and allies can forge something anew.

If you want to be part of forging a new path away from foreign aid and towards Abundance, consider applying for our Sustainable Growth Fellowship. Applications open until July 15^th.

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We are delighted to open applications for the GPI’s Sustainable Growth Fellowship. Following a successful inaugural cohort in 2024, the fellowship continues to place capable professionals inside high-impact Tanzanian businesses where they can build practical solutions and drive measurable growth.

This unique fellowship offers successful candidates a 12 to 24 month paid position working in dynamic businesses across Tanzania. Designed for recent graduates, young professionals, or those seeking to expand their horizons and maximise their impact, the GPI Sustainable Growth Fellowship is a rare opportunity to gain real world experience in driving broad based sustainable economic growth.

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Opportunity Highlights

As a Fellow you will spend 12 to 24 months working full-time in a high impact private enterprise in Tanzania. The GPI works with a range of Tanzanian small businesses. These include Upendo Honey, Dark Earth Carbon, Tanganyika Blue, Kokoa Kamili amongst others. The fellow(s) will be placed within one of these organisations in a role with significant decision-making authority. Their job will be to do whatever it takes to increase impact, deliver programs, and solve challenges. This could be spearheading the design and project managing the construction of a new cocoa processing facility, mainstreaming development impact reporting metrics, building a field team to test a new method of smallholder engagement, or working out how to influence government policy to conserve the amazing biodiversity of Lake Tanganyika but not trade away livelihoods. Ultimately the north star of all these companies is to help people sustainably lift themselves out of poverty. That will be your north star too.

The fellowship package includes:

• A living wage, paid monthly.

• Housing allowance and work/residence permits.

• Health emergency evacuation insurance.

• The chance to pitch, write, and edit articles for thegpi.org as desired.

Who Are We Looking For?

We welcome recent graduates, early-career professionals, those seeking a new challenge or anyone looking for a more impactful role. People from any and all disciplines and backgrounds are encouraged to apply. But you must:

• Show clear interest in firm-level drivers of economic development.

• Thrive in fast-moving, sometimes ambiguous environments.

• Be able translate data into action, explain results in plain language, and build systems that stick.

• Jump at the opportunity to live and work in Tanzania for up to two years.

Why Are We Doing This?

A couple of charts recently stopped us in our tracks. First the good news; many people around the world now have electricity.

But those who do not basically all live in sub-Saharan Africa.

And that’s because sub-Saharan Africa, with East and Southern lagging behind Western and Central, is the last region of the world where poverty remains the norm.

In 2025, 52.8% of the 700 million people living in East and Southern Africa live on less than $3 per day PPP (the World Bank’s current chosen poverty line). In 2010, the percentage was 52% and the population was “only” 410 million people. In both proportional and absolute numbers, poverty in East and Southern Africa has increased over the last 15 years.

The way out of poverty – be that energy, food, shelter, or even digital poverty – is broad based sustainable economic growth. That is why the GPI exists.

International development can be a hard field to get into. This fellowship seeks to connect those who have the skills and desire to have a positive impact with companies that need mission driven people.

Key Fellowship Dates

Applications open: Today!

Applications close: 15^th July 2025

Interviews and Selection process: Late July

Fellows in-country: Early September (or by arrangement)

How to Apply

Interested candidates are encouraged to apply by submitting their resume and a cover letter that outlines their interest in the fellowship and what you hope to achieve. Please send your applications to alex@thegpi.org  by 15^th of July 2025 and feel free to contact him with any questions.

About the GPI

The Global Prosperity Institute (GPI) is a think tank committed to promoting prosperity and combatting poverty by stimulating economic growth in LMICs. We advance the debate with new research, building the evidence base on what works for economic growth in a range of contexts.

For more information, visit our website:

The Global Prosperity Institute

The GPI: new insights on sustainable economic growth and development

By TheGPI

For all the recent Trumpian bluster, tariffs are almost pocket change to rich world governments. In 2023, they represented only 1.8% of US government revenue and only 0.4% across the wider OECD group. By contrast, governments of low- and middle-income countries (LMICs) rely on tariffs for 40% of their revenues. The true “tariffs men” aren’t in the White House. They are in the state houses of LMICs.

Unfortunately for the citizens of LMICs, that tariff dependence is regressive, distortionary, and a brake on industrialisation. But it is likely here to stay.

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Ideology, maybe. Easy pickings, for sure.

From Argentina to Zimbabwe and all points in between, leaders in governments across the globe talk of boosting domestic manufacturing. Many people in governments in LMICs may indeed sincerely believe the best way to do this is from behind a protectionist tariff wall. After all the historical correlation between protectionist policies and manufacturing growth in what is now the rich world is very tight indeed. But there is another reason tariffs are high in LMICs; they are easy to collect.

A ship arrives in port. You have a look to see what’s on it. You tell the person who is importing the goods to pay an import duty. You don’t let them take the goods until they cough up. That’s it. You know they will pay as they’ve already bought the goods and presumably want them for some commercial reason in your country.

Robbing Peter to Pay Paul. But You Really Need Matthew

Despite what Trump may say, tariffs reliably raise the cost of goods behind the tariff wall. The importing company can either ‘eat’ the tariff (reducing their profits) or pass it on to their customers (raising prices). Either way the government has money that otherwise would have stayed in their citizens’ pockets. But money in citizen’s pockets is harder to tax.

OECD citizens pay a dazzling array of taxes. Property, company, income, sales, stamp duty, capital gains, royalty tax, franking, even hypothecated special levies. This complex web of taxes makes governments less reliant on one specific source and is part of the reason why rich countries can dial up or dial down their tax take as politics allows.

To collect these taxes, rich countries have assembled armies of tax agents. In 2022, according to the International Survey on Revenue Administration (ISORA), the famously light taxing US has one tax officer to every 4,000 citizens. The UK has one for every 1,000 Brits. And Canada has one officer for every 783 Canucks.

But the mandarins of the Federal Inland Revenue Service (FIRS) of Nigeria are much thinner on the ground. In a country of well over 200 million people, there is only one FIRS employee for every 21,000 Nigerians. According to the ISORA, the five least resourced tax departments cover an average of 44,000 people per employee. With so few people it makes sense to concentrate your resources where the effect will be the largest.

It’s Tariffs or It’s Bust

LMICs do not have economies that are structured for easy taxation. Income tax is only possible to levy on a large scale when people are working in the formal economy; large informal sections abound. Corporate taxes can only be wrung from profitable companies; medium to large companies report smaller profits in LMIC. Property taxes require clear maps to determine where one property finishes and another one starts; you can guess what LMICs are also missing. The list could go on.

The consequence of having hard to tax economies and too few people to do the taxing is a reinforcement of the tariff first strategy. Bank robber Willie Sutton was once asked why he robs banks. He replied, “because that’s where the money is”. If you are looking to get money for your government, taxing imports is where the money is.

This has real world consequences. An import tariff is a regressive tax; the effects fall more on the poor who spend a higher proportion of their income on easily tradable goods like food, fuel, and basic manufactured goods. It is also distortionary as it arbitrarily makes some goods more expensive than others and therefore preferences some parts of the economy over others.

Trade advocates, a group that includes the GPI, need to understand that if they want tariffs to be lowered, revenue must be found as a replacement. LMICs should progressively lower tariffs whilst concurrently continuing to invest in tax collecting capabilities. Different countries will have different priorities, but options abound. Governments could embrace digitisation of VAT collection, invest in cadastre surveys to unlock property taxes, simplify and broaden VAT rates, or lower the cost of formalisation of the workforce to collect more income tax. They probably should do all that and more.

Tariffs are an ideological and fiscal crutch. They are used to support populist calls for self-sufficiency, and they are the bedrock of government revenue. At their worst, they can also be used to prop up whole governments who need to buy favours from politically connected businesses. But regardless of their merits, few people kick away their own crutches before they can walk.

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Succinctly illustrating the colossal gap between the world’s rich and poor is a challenge. The “dollar a day” stat was nice and catchy and simple, but its impact faded over time. This map caught our eye the other day via X/Twitter. Average total lifetime income (and roughly speaking, consumption) of Americans, Australians, Irish and a couple of other countries: pushing US$10,000,000. Total lifetime income for someone from DRC, Yemen and a shamefully large number of countries: around $25,000.

https://x.com/lymanstoneky/status/1917600647211352109

Mexico’s social-security inspectors cranked up payroll audits as part of a worker formalisation drive. And compliance duly ticked up. So far, so standard, formalisation = good, pats on the backs all round. But according to the study, the typical firm didn’t just formalise their workers. They also responded by trimming headcount and shaving wages…

Formalisation of the labour market is often a stated developmental goal. But this study says there might be more to the story.

https://voxdev.org/topic/labour-markets/challenges-reducing-informal-employment-evidence-mexico

Editor’s Note: This is the first article written by one of our GPI Fellows. When they aren’t hard at work at the coal face of sustainable development, we also press gang them into writing articles. We have the wonderful Annemarie Vogelberg to thank for today’s article.

It’s in our nature. We learn from others who’ve gone the way before us. Whether it’s a baby learning to walk, a 17-year-old novice driver sweating at a roundabout, or an ambitious university graduate learning the ropes of how to build a business from the lived experience of their manager.

So goes human nature and so goes economic development. The textbook tells us that as countries move up the industrial ladder from agriculture to manufacturing, certain economic activities would be outsourced to latecomers who strive to replicate the wins of industrialised nations. This phenomenon was coined the “flying geese” model by Japanese economist Akamatsu in the 1930s to describe rapid industrialisation in East Asia, with Japan projected to lead the way as the head goose.

Although countries continue to learn from one another, the road ahead to success is not so clearly predetermined as the flying geese model makes it out to be. The 21^st century global political economy increasingly sidelines this “follow-the-leader” master plan. Today’s era rewards gutsy geese, not copycats.

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Our first instinct may be to lament that the ladder has been kicked away, whether purposefully or inadvertently. Don’t developing countries already have it hard enough faced with the complexities of international trade rules and volatile global markets?

But not all is lost. Quite the contrary. There is some unrealised potential for developing countries to chart their own course. Something that has historically been denied to most. Here’s what the playing field looks like today and how developing countries can still emerge as winners:

One of the main reasons why the original flying geese pattern struggles to hold today is the organisation of production in global value chains (GVCs). Developing countries must now join existing GVCs, strategically specialise and trade in niche tasks rather than follow the traditional route of building vertically integrated industries and trading finished goods. Here the challenge is to upgrade away from low-value and low-skill segments that retain no local value capture. Making FDI sticky (deeply rooted in a location) rather than footloose (highly mobile) is key. Unlike lead geese that protect their followers from the storm, lead firms control and concentrate high-value segments in established hubs. They create barriers that are difficult for new entrants to overcome, such as advanced infrastructure, intellectual property rights, and skilled labour requirements.

With digitisation and technology marching ever onward, doors are opening to digital and service-based industries. There is potential beyond the frequently cited examples such as Kenya’s M-PESA that promise strategic leapfrogging. Technological progress has gone as far as to stimulate value addition in sectors like agriculture, which traditional development theory would advise to exit asap. Enter industrialisation of freshness: a whole new industry that is reviving fruit exports in South Africa and elsewhere. Its success depends on fruit producers enhancing fruit quality and extending product longevity through research and technological advancements, thereby driving structural transformation through higher value crops. Similar examples include Cassvita, a Cameroonian company that uses technology to increase the shelf life of cassava and Kenyan Synnefa that installs smart greenhouses to improve agricultural productivity. Compressed development is the new norm as latecomers undergo transformation in a much shorter time, skipping or simultaneously navigating development “stages” that used to be much clearer.

Even if countries wanted to follow the lead geese, this is no longer always feasible. Latecomers are fighting for the remaining market scraps and are facing premature de-industrialisation, especially in sight of China’s global manufacturing dominance. This dynamic gives lead firms ample reason to remain footloose, continually seeking cheaper production locations without fostering long-term development in host countries.

But the baby geese should not necessarily be thrown out with the techno optimism bathwater. There are still valuable lessons to learn from the geese ahead. Here are three elements of the old-world order with enduring relevance:

1. Manufacturing will remain key for job creation and for harvesting the low hanging fruits of catch-up growth from industrialised nations. This is something that the service economy, built on commodification and automation, cannot provide.

2. State-led direction is more important than ever, recognised by the revival of industrial policies worldwide. Development nowadays requires a major balancing act between promoting employment creation, export earnings, structural transformation into knowledge intensive activities, favourable gender, class and geographic distributions, and a green transition. Developing countries are likely to see a two-speed growth track emerge as governments blend traditional lead geese imitation with new, innovative trajectories.

3. Regional cooperation and trade for industrial upgrading are just as, if not more, important than before to reduce dependency on lead firms and an unstable geopolitical climate. By overcoming fragmented markets and aligning with local development priorities, this approach fosters regional demand for goods that are not yet competitive globally, such as in manufacturing, while avoiding a race to the bottom through coordinated trade policies.

Undeniably, contemporary latecomers face a completely different set of circumstances to those of rich industrialised nations. It certainly requires innovate thinking to navigate this new ground successfully. But as always, defeat is a choice. By identifying new sectors with lower entry barriers, the gusty geese of today may be the golden goose of tomorrow.

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Someone doing a job they aren’t suited for is bad for everyone. They may be ill-suited in any number of ways – overqualified, underqualified, doesn’t like working from home, needs flexible hours, is poorly managed, or the worst of all: a bad cultural. Culture, after all, eats strategy for breakfast. Or so, allegedly, spake Peter Drucker (and every Silicon Valley penned business book ever since).

But whatever the root cause, this mismatch is a drag on an organisation’s performance, economic growth, and just plain old human happiness. The OCED reckons that around 40% of workers in developed economies are either over-qualified or under-qualified for their role. The World Bank estimates that global productivity could be as much as 12% higher if the right people were in the right jobs.

It’s clear that matching the right people with the right jobs is tough. But a growing school of thought says that much of the conventional hiring wisdom is often wrong.

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It doesn’t have to be this way!

The GPI was started by a few of the people who work at Masika Ventures. In our day jobs, we have hired hundreds of people over the last decade. Through much hard work and some very hard-won lessons, we have iterated our way to something that works for us. Our method works particularly well at finding excellent, early career graduates who are just in need of an opportunity. Importantly, the unusual method itself gives applicants a window into the type of company they will be working in.

You can follow this link to a flow chart of the gory details of the process.

Or for the Cliff Notes, here are a couple key insights…

TL;DR

1. Cast your net wide. But filter quickly.

Jafar knew it. It’s all about the diamond in the rough so cast that net wide (or whatever you use to find diamonds). But you don’t want to clog your inbox with 1,000s of applications. So do not waste your time by asking people to email a CVs or even having a mailbox people can email at all. Get applicants to fill in a form, export the results to excel, and triage quickly.

Remember that the goal at the start is to not limit the number of applicants in any way. Make the job post as accessible as possible. We recommend expressly saying that female candidates are specifically encouraged to apply. Our research has told us that job posts that state this get more responses from women but don’t decrease the number of male respondents.

The questions in the form don’t need to be closely tied to the role you’re trying to fill. Test their diligence, probe their ability to learn. That may be getting harder with our good friend ChatGPT always on hand, but it’s far from impossible. When making your form, run a potential question through a LLM to make sure it can’t spit out a copy/paste-able correct answer. Visual questions remain hard for our AI overlords to always answer correctly, so use them.

One of our favourites is to provide a picture of a vernier calliper (an archaic measuring device) and ask the candidate to give the measurement shown. You can learn how to read the callipers with two minutes of googling or AI searching. But just copy/pasting the image into ChatGPT and asking the AI itself what the answer is, offers up the wrong answer.

2. Actual work is the key

Once you’ve triaged the wheat from the chaff (we aim for 20% wheat, 80% chaff), get your long list to do some actual work. We aren’t talking about unpaid labour here but the best way to find out if a candidate can do the potential job is to give them a small bit of that job – and see what they come up with. No need to make these too laborious. Aim for the task to take about an hour to complete if they know the subject well. If they don’t know the subject well, it should take them 4hrs with the boundless resources of the internet at their disposal.

If someone can learn how to do a task, that’s a good thing. You want that person on your team. If you are looking for a Procurement Officer, it doesn’t matter if they have a Procurement degree. What matters is that they can do the job of a Procurement Officer. The quality of their actual work tells you a lot more than the words on their CV.

3. Interviews are garbage

Job interviews tell you one thing about a candidate: if they’re good or bad at job interviews. Interviews are a skill, and it can be hard to determine if someone will be a good hire or if they just have experience in interviewing. If they are young, they likely will be nervous. The inevitable patchy quality of online calls shouldn’t bias you against a candidate. All judgements are of course subjective to some extent, but interviews are where we are most easily be led astray by our biases. Accordingly, the interview only accounts for 5-10% of the final tallying of scores.

The above system is no panacea. But for finding motivated university graduates who are keen to learn new skills, it’s worth a try. Not all the received wisdom about hiring and job searching is wrong but enough of it is, and the results are so mixed, that taking a second look at the process is time well spent. After all, if culture really does eat strategy every day of the week, it’s your people who will be picking the restaurant.

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Three great funding opportunities for research and further education. A Master’s programme scholarship for a Tanzanian graduate to head north to the University of Edinburgh, some more than handy research funds for a current PhD candidate, and a larger grant for research into “structural transformation, productivity, and economic growth in low-income countries”.

1. Nyerere Scholarship

The Nyerere Scholarship, named after the first President of Tanzania and University of Edinburgh graduate Julius Nyerere, is now accepting applications. Open to talented recent Tanzanian graduates from the University of Dar es Salaam (graduated in the last three years), this fully-funded opportunity provides a pathway for bright minds to follow in Mwalimu’s footsteps. The scholarship covers the costs of the University of Edinburgh’s MSc in Africa and International Development. Applications open until January 28th 2025.

2. PhD Research Grant

The Structural Transformation and Economic Growth programme is offering grants of up to £15,000 to currently enrolled PhD candidates to assist with research and data collection costs. The research needs to be “relevant to policy in low-income countries, particularly in sub-Saharan Africa” but otherwise to scope is pretty broad. Deadline for applications is December 15th!

3. Larger Research Grant

Another one from the good people at the Structural Transformation and Economic Growth programme. Up to £100,000 (or more in certain extraordinary circumstances) for broadly similar purposes as the PhD research grant above. This one is open to all comers. Deadline for applications is January 20th 2025.

Good luck and happy researching!

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Metrics, measures, markers. Indices, indicators, indexes. The world abounds in tools that compare X with Y to tell you something about Z. Some are useful, some are not. We looked around and thought we had better add another.  

Introducing the GPI’s Labour for Lagers Index. This index tracks how many hours work at the national minimum wage you need to do to enjoy a big, delicious beer at the end of the day (or hour) in the capital city of that country. Think of it as a GDP at PPP for the People. As a general metric of affordability, the lower the number, the more affordable life is but actually it’s a measure of leisure time. If you have to toil for almost five hours in Madagascar to knock one back in Antananarivo, you might be thinking twice before ordering that second round. But with less than 25mins of minimum wage work in Australia, you can be sitting pretty at BBQ in Canberra knocking the top off an ice-cold Foster’s (well maybe not actually a Foster’s). 

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This index is obviously a little bit tongue in cheek (or feel free to insert your own play on words about drinking beers) and doffing its frothy head to The Economist’s Big Mac Index of relative currency value. However, beer is a globally consumed product with relatively consistent quality and production methods across different regions. This makes it relatively easy to compare prices across time and space without too many variables affecting the results.  

It also shows just how intellectually shallow, unlike GPI’s Nobel worthy analysis, the Dollar per Day (now $2.15 per day) poverty line is. People working a minimum wage job in Timor-Leste earn well over twice this amount. So they are comfortably well out of “poverty” by this meagre definition. But they will spend almost 7hrs working for their sole chilled beer in a bar in Dili. Hardly the definition of a development success that the World Bank economists would have envisaged in the late 1980s when they first delineated the poverty line.  

So the next time you quaff down a warm ale in Old London Town (34mins, 46secs), spare a thought for the working stiffs of Lilongwe (4hrs, 44mins) or Luanda (9hrs, 23mins). Broad-based sustainable economic growth is the best way we can raise living standards around the world. And if it means you don’t have to spend half your day trying to afford one beer, that’s something we can all raise a glass to as well. 

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Clinic+O is a Guinean health-tech firm that brings digital and in-person care to underserved communities in one of West Africa’s poorest countries. A small but highly skilled team are creating an ecosystem of doctors, nurses and community health workers who have so far delivered outpatient services to over 50,000 patients and screened tens of thousands more for malaria, diabetes, and hypertension. But finding engineering talent in Guinea is tough. So when Clinic+O’s lead software engineer decided to move to Malaysia to pursue a Master’s degree, this was not only a major loss for Clinic+O and Guinean healthcare, but it also appeared to be a textbook example of the “Brain Drain”. Highly skilled citizens of developing countries leaving for rich countries to pursue educational or career opportunities and leaving a skills deficit in their wake. Nevertheless, despite the “evidence” of stories like what happened at Clinic+O, the fact is that outside tragic cases of civil war or political repression, the Brain Drain doesn’t exist. 

Humans are storytelling animals. Narratives that resonate with ‘common sense’ or chime with a lived experience have the power to shape what people think is true. And things that rhyme are wildly more likely to be believed. But stories based off personal experience or anecdote make for a bad basis for public policy and rhyme is an even worse benchmark (Dr Suess had many strengths. But public policy? Not a mensch). Population level effects are what matters for economies. 

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When individuals see education as a viable pathway to a better life, they invest more into their education. This demand of education creates more supply, and a more educated society arises. Despite what people say in surveys, only a minority of people – educated or otherwise – ever emigrate. Education, emigration, and a well-educated society are not fixed constants or a zero-sum equation. When The Philippines “exports” their health care workers around the globe, other people in The Philippines see training as a health care worker as a path to a better life. Few of them leave. The ones that do benefit from higher wages, the ones that don’t also benefit from higher wages and The Philippines ends up with more, not less, health care workers. 

The simple narrative of one doctor moving from Country A to Country B, leaving Country A with one less doctor for the rest of time is not how the world works. Many things are in flux and Just So stories based on the personal experience of knowing someone who moved somewhere do not generalise out. Some of Silicon Valley’s best and brightest are Indian expats. India is home to a large and thriving tech scene employing millions of skilled IT workers. This did not happen through luck. Indians saw their fellow Indians gaining better wages and opportunities to move abroad through computer science degrees and so they went and got more of them. 

When the UK shut themselves off from the European labour market, they eventually worked out that they needed to open themselves up to other labour markets to address the shortfall in working migrants. The Health and Care Visa was launched in mid 2020 by Priti Patel. The uncapped scheme extended a residence visa to qualified health workers who had a job offer and a minimum level of English proficiency. Not surprisingly it was health care workers in former colonial countries like Nigeria and India that were the main beneficiaries. In 2020, 685 Nigerian-born nurses joined the UK nursing register. In 2021 that number had increased by more than 400% to 3,010. But fear not, the graph below tells the story.  

The UK got some nurses, more Nigerian nurses got higher salaries in the UK, the Nigerian populace got a lot more nurses. 

Correlation is of course not causation but the trend across countries and professions is clear. Demand creates supply and supply outstrips the demand for emigration. This relationship does break down though under some circumstances, namely in authoritarian regimes who don’t care to, or don’t allow others to, educate their populations or when a significant macro level shock like war causes many people to leave all at once. When Syrians were forced from their homes through civil war, there was no counterbalancing educational expansion back in Damascus.  

Thankfully cases like Syria or Venezuela are rare (although not rare enough). But free or mostly free countries should not fear from their citizens leaving for greener pastures. On the day an educated employee leaves Clinic+O, there will be a hole. But the market for human capital responds and Guinea – and perhaps even Clinic+O – will create more educated people. Over time, some migrants even return. Clinic+O was started by Nasser Diallo. Nasser was born, raised, and educated in Guinea. Then in 2016, just like his future lead software engineer, he headed abroad for further education and his first professional jobs. But then almost four years ago Nasser returned to Guinea. He came with his Master’s from Oxford and professional experience at Facebook but also with a dream to ensure everyone in West Africa has access to affordable quality primary care and to enable the practitioners that provide it. Clinic+O increases the demand for highly skilled workers in Guinea and helps provide basic medical care to those who have too little. 

Don’t believe the Just So story. Even if it rhymes.  

In March this year, the GPI announced its first Fellowship program. The 24-month program places fellows in impact-driven businesses in Tanzania. We aim to provide hands-on experience in contributing to sustainable economic growth by addressing real-world challenges at the coalface of development.

We were delighted with the number and quality of candidates for this year’s program and are very excited to announce our first two GPI Fellows, who will start their work in Tanzania next month. The chosen fellows, each bringing a range of skills and experiences, are set to play an integral role in supporting the operations and growth of these businesses.

In this post we tell you a little bit about our inaugural fellows and what they will be doing in Tanzania over the next two years.

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Giuseppe Carminati

Giuseppe Carminati holds a Master’s in quantitative finance and risk management from Bocconi University. He previously earned a MSc in solid-state and semiconductor Physics at University of Milano-Bicocca, with a thesis about the growth of quantum dots for telecommunication applications.  He later worked as an R&D Engineer at Vishay Intertechnology, where he joined the power electronics R&D team. Giuseppe enjoys staying informed on economics, playing the bagpipes, trekking, and learning new languages.

Giuseppe will be joining Dark Earth Carbon, a company on a mission to industrialise carbon removals to reverse climate change. Dark Earth Carbon takes residues from the timber and agricultural sectors in Tanzania and subjects them to a process of pyrolisation to create ‘biochar’, a highly stable form of almost pure fixed carbon. This biochar not only sequesters carbon for 1000s of years but, when applied to soil increases organic matter and water holding capacity, combats soil acidity, and overall improves yields – something which is desperately needed across Tanzania’s agricultural-dependent economy.

Giuseppe will join Dark Earth Carbon as a Site Manager at their new facility in Western Tanzania. This 3T per hour factory in one of Tanzania’s poorest regions will create over 100 jobs, sequester over 15,000T of CO2e per year, and provide much needed organic fertiliser for over 4,000 smallholder farmers.

Annemarie Vogelberg

Annemarie is German-British and has just completed her MSc in Development Management, specialising in African Development, at the London School of Economics and Political Science. She previously studied social and political sciences for her undergraduate in France and Germany. She brings on the ground development experience from working for a political foundation connecting various socio-political stakeholders in Ghana. Annemarie enjoys moving to new countries and meeting people from all spheres of life and backgrounds. She is passionate about bringing individuals and ideas together and forming sustainable partnerships between Europe and Africa.

Annemarie will be working with a consortium of high impact companies, including Upendo Honey, East Africa’s leading organic honey company; Tanganyika Blue, who are pioneering Native Species Aquaculture in the world’s most important topical lake; Dark Earth Carbon, Giuseppe’s soon to be home for two years; and Halisi Agri, a company bringing transparency and environmental sustainability to Tanzania’s sesame industry through higher farmgate prices and a focus on organic agriculture. Annemarie will help these companies professionalise their business services, as well as mainstream their impact reporting.

Creating impact is only sometimes about breakthrough technology or revolutionary business models. But it is always about getting the basics right and making sure there is paper in the printer. It is the prosaic work of systems and procedures that delivers the poetry of impact and improved livelihoods. Annemarie’s work will turbo charge these high impact companies by ensuring services are delivered effectively and organisations are built to have a foundation for scale.

We look forward to welcoming them to Tanzania in September and can’t wait to see how Giuseppe and Annemarie adapt to their new roles and new environments.

Some people, possibly even many people, believe that a Universal Basic Income is an idea whose time has come. 2020 Democratic presidential candidate Andrew Wang made a UBI a central plank of his campaign. With the rise and rise of automation in manufacturing and AI reputedly coming for all our jobs, a UBI has been mooted as both a necessity and a perk of submitting to our robot overlords.

But the consequences, be they positive or negative, of a UBI have been hard to ascertain because the “U” part of the UBI makes any implementation eye-wateringly expensive. To date, UBI pilot schemes have really put the micro back into microeconomics. 2000 people in Finland and 125 people in Stockton, California do not make for a very large evidence base. Even the much reported on and Sam Altman backed UBI, which has just published results, was only with 1000 people.

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All of this makes the GiveDirectly UBI scheme in Kenya all the more interesting. Superstar economist Abhijit Banerjee and an equally luminous list of co-authors have just published research findings at the two-year point (of a potentially 12 year scheme). Enrolling ~22,000 people, the scheme has three treatments and a control group of another 11,000 people.

Treatment 1, Short-term UBI (ST): Regular unconditional payments for two years. Approximately 8,800 adults across 80 villages received a transfer of US $0.75 nominal per day (or $1.88 at PPP) for two years. This is total of around $550 which is ~30% of median annual income.

Treatment 2, Long-term UBI (LT): The same structure and value of individual payments as the ST treatment except they last for 12 years. Over the full length of time, that makes a total payment of ~$3,285. There are 5,000 people across 44 villages in the LT treatment.

Treatment 3, Lump-Sum Transfer (LS): Recipients receive a one-time payment equivalent to the total amount of the short-term UBI payments. This $550 was paid via mobile money to approximately 8,800 adults in 71 villages at the start of the scheme (so two years ago). The LS treatment isn’t really a UBI but rather a once-off unconditional cash transfer.

Control: Around 11,000 people are in the control group across all the treatment villages and also non-treatment villages.

The two-year point was chosen for this study as all treatments had received the same amount of money. The ST treatment payments were just finishing, the lucky devils in the LT have 10 more years to run, and of course the LS money was paid out two years ago.

Here are three results that caught our eye.

1. Stable labour supply and a shift to self-employment:

Concerns that a UBI set too high might reduce the incentive to work often smack of puritanical finger wagging. And those concerns are frequently misplaced. The study found no significant reduction in how much people worked. Instead, there was a notable shift from wage employment to self-employment.

Interestingly a similar shift out of wage work was found by Blattman, Dercon and Franklin when studying factory workers in Ethiopia in 2019. Breaking news: Another economics paper confirms that low wage drudgery sucks and people choose not to do it if they don’t have to.

Unfortunately for UBI proponents, the impact was most pronounced with lump-sum payments. Score it as one for unconditional cash transfers. But more importantly, how many of these self-employment options are going to power an economic transformation? Whilst these small enterprises often make a positive contribution to household income (for example, setting up a small shop with the bit of extra money), the path to scaling up these enterprises up is rocky.

2. No inflationary pressure despite increased economic activity:

Despite the injection of cash, there was no evidence of inflation eroding away the bump in people’s purchasing power. With all the new micro-enterprises popping up, the number of items available for purchase in the treatment villages doubled. It seems the phased nature of (most of) the transfers allowed sufficient time for the market to adjust.

3. Improved mental health across the board

When you don’t have a lot of money it can be hard to think about much else. Valuable brain power is taken up deciding which essential expense (food, rent, clothing, medicine) is not quite as essential as the others. The good news is that all treatment arms of this program showed a reduction in depression and an improvement in life satisfaction, happiness, and well-being. Even though all groups had received the same amount of money at the time of the study, the LT treatment showed the largest effects. It’s easy to see how the security of more money in the future caused this stronger effect.   

With another 10 years to run, many more papers will be written about this particular UBI scheme. Given its size, even just at the two-year point, it’s one of the most significant in the field. But with all the good news reported above, let’s not forget this would be a very expensive program to roll out to anything close to Universal. Extending to all Kenyan adults (including these guys) would cost over $15 billion. That’s 14% of GDP and almost four times the annual education budget.

But for the ~22,000 Kenyans who are the lucky guinea pigs, a UBI certainly looks like a pretty darn good thing.

On May 29^th 2023, Nigeria’s newly elected President Bola Tinuba rose to give his inaugural address in a packed square in Abuja. “The fuel subsidy is gone”, he declared. In those five words President Tinuba ended a harmful distortion to the economy, freeing up much needed cash for more productive purposes than paying people to idle in traffic.

For myriad reasons Nigeria has long failed to gain the requisite wealth from its oil reserves. Civil war, terrorism, theft, and mismanagement have all played a role. However, since the mid-1970s Nigeria has also heavily subsidised petrol. By 2022, the subsidy cost the public purse over US$10 billion a year, with around 40% of government revenue going to fuel subsidies. Few economists or policymakers thought this was a good idea. The Economist certainly never tired of telling Nigeria to cut the subsidy forthwith and castigating Presidents who tried and then reneged (which was several of them).

Getting rid of this subsidy would be a clear policy win. Only it wasn’t.

In the face of spiralling inflation, in part due to surging petrol prices, President Tinubu has reinstated the subsidy. The incomparable Ken Opalo puts the failure of this reform to stick, at least partially, down to the government trying too many things. Other (familiar) commentators agree.

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So much to do, so little time

The governments of poor countries face an almost impossible job. Siviwe Gwarube, the incoming Minister of Basic Education of the new South African government would love to have the To Do list of newly minted UK Secretary of State for Education, Bridget Phillipson. And what’s true in the education or energy departments is true for the whole of government. Where resources are tight, but the needs are great, focusing energy and that valuable political will is vitally important. Sometimes the eggs really do need to go in one basket. The problem is, there are a lot of worthy baskets.

Long term gadfly of the progressive left, Bjorn Lomborg recently published Best Things First: The 12 most efficient solutions for the world’s poorest and our global SDG promises. Mr Lumberg suggests the 12 best global investments to be tackling:

• Tuberculosis

• Maternal and newborn health

• Malaria

• Nutrition

• Chronic diseases

• Childhood immunization

• Education

• Agricultural R&D

• e-procurement

• Land tenure security

• Trade

• Skilled migration

All sound ideas and we are not here to debate the merits of each one or make a case for something else. Many of Mr Lomborg’s list would be at least partially tackled at a supra-national level. But ultimately it will be national or sub-national governments implementing programs and rolling out strategies.

Unfortunately, not even those paragons of state governance, the Scandinavians, could hope to deal with more than one or two of them at a time. Even with all the ‘political will’ in the world – an oft quoted precondition of success – Malawi has even less chance of successfully tackling multiple.

Somewhat unhelpfully Mr Lomborg doesn’t prioritise amongst the dozen best things he has suggested.

Just put one foot in front of the other

State capacity matters. Only anarchists would argue that the right size of the state is non-existent. At a minimum the government must have a monopoly on violence; something too many countries around the world have not yet achieved. From there, the delivery of services from road building to end-of-life care only gets more complicated. But the countries with the most pressing problems have the least resources with which to deal with them.

On May 29^th last year as Mr Tinubu was proofreading the speech he was about to give, Boko Haram continued to torment the Northern reaches of his country. Fulani pastoralists and Hausa farmers continued to have deadly clashes in the middle belt. And sea level rise continued batter the low-lying Niger delta and coastal communities in the Gulf of Guinea. Mr Tinubu had some challenges.

The moral of our story is to pick one thing and stick to it. If President Tinubu wanted the fuel subsidy gone, he would have had to put 100% of his government behind it which doesn’t leave a lot behind for much else. Try and do several complicated things at once and you’ll end up doing none. The hard thing is that to achieve success in one critical area is not just a case of putting political will into it. It’s that you then need to have the political will to say ‘not right now’ to even the worthiest of things in another critical area. Given the challenges facing governments of low- and middle-income countries, that’s a tough ask.

Just the term ‘offshore entity’ sounds shady. Secret meetings in astute bank vaults in the Swiss Alps or dropping off suitcases stuffed with cash to some sun-drenched speck in the Caribbean from a seaplane. But, and hear us out on this one, not all offshore entities are bad. One of the main uses of an offshore entity is to not be taxed twice when investing outside your home country. A major job creating element absent from Low- and Middle-Income Countries (LMIC) is investment. Quietly and counterintuitively, the much-maligned offshore entity is a key element of creating broad-based sustainable economic growth.

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In a rich man’s world…

In the global race to attract investment, it’s a dog-eat-dog world. Countries will try all the tricks in the book to get people and companies to invest. Golden visas are popular (although frowned upon by the EU), Special Economic Zones continue to multiply, recent years have seen an arms race of state subsidies across the globe. US Treasury Secretary Janet L. Yellen was recently in China to try and get them to go easy on their green energy subsidies, so the US’s own green energy subsidiaries wouldn’t just get cancelled out.

Now imagine you are the finance minister of an emerging economy. You can’t offer the trillion-dollar subsidies lavished by your rich world peers. Your counterparts over at the ministry of education are still busy building the world class universities that OECD countries boast about (and your citizens apply for scholarships to attend). The ministry of transport and infrastructure hasn’t quite finished all those roads, rail, airports, and ports you need. The ministry of land is working on simplifying the land tenure situation; but it’s still not great. The myriad interlocking institutions and infrastructure elements that are present in countries that attract the most inbound investments take decades to build. There are also few shortcuts to building effective state capacity. Luckily, you have a friend or two overseas.

Places such as Hong Kong or Mauritius tax the profits of companies that are registered in their jurisdictions at low or even zero percent. It might not seem immediately obvious why the fiscal arrangements of often very small countries would matter to you as a reformist Minister of Finance of a LMIC. You want investment, you want factories built, call centres operative, and garments being sewn. Much of this investment needs to come from abroad. As the reformist minister you’ve pressed the flesh at Davos. You’ve spoken up the opportunities and the chequebooks are out. Typically speaking those who invest wish to one day realise profits. This is where those little low and tax-free countries can help.

The winner takes it all…

A double taxation agreement (DTA) is a deal between two countries that helps prevent income from being taxed twice. It sets rules on which country can tax certain types of income, making taxes simpler and fairer for people and businesses. For example, if two countries have a DTA they may agree that dividends paid, and taxed, in one country are not taxed as income in the second country. If no such agreement exists between the two countries, both countries will tax the same money. To explain, let's compare three scenarios where 100,000 USD in profits are generated a subsidiary company:

1. A UK company 100% owed by an Italian company who operate under a full DTA. 

2. A company in Ghana similarly owed by an Italian company who wants to remit profits back to Italy.

3. The same Ghanaian company except this time remitting profits to its parent company incorporated in a zero-tax jurisdiction.

In the first scenario – the UK company with a full DTA – the corporate tax paid would be 21,710 USD (the UK’s corporate tax rate on 100,000 USD profit is 21.71%). Italy’s corporate tax rate is 24% so the Italian parent company would be credited the tax already paid (21,710 USD) but have to shell out the remaining 2,290 USD (to make it up to 24,000 USD). The parent company would be left with 76,000 after all taxes are paid.

But in scenario two, with the Ghanaian company remitting to Italy without any DTA in place, the profits would be taxed three times. Once in Ghana at 25% corporate tax (25,000 USD), then a 5% Withholding Tax on the profit dividend sent out (3,750 USD), and the money that makes it to Italy would be taxed as income at 26%. This leaves the Italian company with 52,725 USD of their original 100,000 USD. The effective tax rate of investing in Ghana becomes a stonking 47.275%.  

However, if the Ghanian company is registered in a zero-tax jurisdiction (our third scenario), they would still pay the full 25,000 USD in corporate tax as well as the 5% WHT tax on dividends to the Ghanian government. But their offshore company in a zero-tax jurisdiction would then pay, well, zero tax. Meaning the final after-tax income is 71,250 USD which is not a million miles off what an Italian company investing in the UK would pay as well.

Money money money…

Unfortunately, LMICs do not have many DTAs in place. Whilst the countries that make up the OCED almost all have DTAs with each other (and a bunch more besides), Tanzania has nine DTAs in total, Benin just four. DTAs take time and resources to negotiate. And obviously individual investors cannot negotiate one on a country’s behalf. If you are an investor from a country without a DTA you will face an effective tax rate of as much as 45+% on your African adventure. However, if you set up a company is a low tax jurisdiction and then invest, you’ll still pay tax twice (once in the ‘host’ country, once in your ‘home’ country). Just the second time around it will be zero or a low single figure amount.

Abuses do and will continue to exist. Companies will engage in underhanded transfer pricing (in short finding creative ways to stack the ‘host’ company with costs, whilst the offshore company shows all the profit). A matryoshka doll of companies within companies can obscure ultimate beneficial ownership. Some jurisdictions may be less enthusiastic about enforcing laws than others allowing ill-gotten gains an entry point into the global economy. These practices are illegal and immoral, and many shadowy corners of international finance are in desperate need of a burst of sunlight. But these ills can be tackled. Even Switzerland’s famously opaque banking system was eventually cracked open by reformist Swiss politicians such as Eveline Widmer-Schlumpf and others.

Emerging economies need investment. Their economies often have some of the highest growth rates in the world. However, the litany of issues that make emerging economies less than optimally desirable places to invest is long. Offshore entities and low tax jurisdictions go some way to leveling the tax playing field. They are no panacea and often deserve the opprobrium cast their way. But there is a reason why it is the finance ministers of the G20 and the OCED who are the most vocal in their denunciations. Offshore entities are LMIC finance ministers’ secret best friend.