Joe Studwell

agricultural processing so there's that and then you have it's very variable by country you have the beginnings of some greater amount of other manufacturing in Africa but this is a return if you look at it as a share of GDP it's sort of bottoming out and going up and hopefully heading back towards where we were in the 70s at the end of the 70s and that is because after independence when

Economies were much smaller.

African governments put a lot of money into manufacturing projects, and they almost all failed.

Again, largely would fail for demographic reasons.

In 1960, factory labour rates in Africa were twice what they were in Asia.

It seems extraordinary.

That's the supply and demand of human labor.

But now wage rates, if you compare with China, so China's at about $600 per month for factory labor now.

And if you compare with that, different African countries are between half and one-tenth.

So the cheapest would be places like Madagascar or Ethiopia, $60 a month for a factory worker.

Of course, that's bringing in some investment.

And the leaders in the manufacturing investment, if you think of FDI, are the Chinese.

There was a piece in The Economist last week or the week before talking about this.

It's reckoned based on the FT's, on the Financial Times FDI database, which is micro level firm by firm.

It's reckoned that the Chinese put over 12 billion into manufacturing investment in China last year.

And most of it is because profit rates are pretty low in China now.

You know, things are so competitive.

And they come and they look at Africa.

And, you know, often people are seeing products that are priced three, four, five times what they cost in China.

And so Chinese investment is coming, chasing better returns there.