Many conversations about Africa’s economic problems eventually end up with the same recommended solution: “state capacity.” It gets thrown around constantly now, almost like a magic spell. We’re told rich countries succeeded because their governments became efficient, disciplined, and capable of carrying out large national projects. So naturally, the conclusion follows: if Africa wants prosperity, it needs stronger state capacity too.
Sounds smart at first. Very policy-wonk. Very “serious economist” language.
However, the moment you start pressing people on what they actually mean, things quickly get fuzzy. Ask five advocates to define state capacity and you’ll probably get five different answers. To some, it means administrative efficiency. To others, it’s the government’s ability to tax more effectively, regulate industries more aggressively, build infrastructure faster, subsidise strategic sectors, or direct the economy toward “development goals.”
The wording may be different wording, but it’s the same underlying assumption. They fundamentally believe society improves when the state grows more powerful and more deeply involved in economic life. This assumption is backwards.
The entire argument treats government as though it creates wealth. It doesn’t. Governments consume and redistribute wealth. Every Rand the state spends must first be taken from someone else through taxes, inflation, debt, licensing schemes, permit systems, tariffs, or regulation. The state cannot hand out what society has not already produced. This is what gets ignored constantly.
When governments build roads, fund schools, launch welfare programs, or subsidise industries, people talk as though the state itself produced those resources out of thin air. It didn’t. Those resources came from businesses, workers, entrepreneurs, investors, traders – actual producers in the economy.
The question is: are politicians and bureaucrats better at allocating resources than millions of ordinary people making voluntary decisions every day? History says no – as does common sense.
A businessman who makes terrible decisions loses money. Sometimes his entire business collapses. There are discipline and consequences, but government officials operate differently. A ministry can waste billions, fail spectacularly, and somehow still receive a larger budget next year. Failure in politics often expands institutions instead of shrinking them.
This is one of the most dangerous things about this whole “capacity” obsession that people don’t think through properly. The more power a state accumulates, the greater its ability to make catastrophic mistakes at scale.
A weak state can only ruin things within limits. A highly organised, highly centralised government? That’s a different beast entirely. It can inflate an entire currency into irrelevance, regulate industries into paralysis, monitor citizens extensively, seize property efficiently, restrict trade nationwide, and crush economic freedom with frightening precision.
People hear “strong state” and imagine smooth highways and functioning trains. Fair enough, but history also shows strong states becoming extremely effective machines of extraction and control.
And honestly, many African governments are already very “capable” in the areas that matter to political elites. They may struggle to provide stable electricity or decent infrastructure, but somehow, they remain remarkably efficient at: collecting taxes, imposing licensing restrictions, manipulating currency systems, enforcing import controls, seizing land and distributing political patronage
Take land rights, for example. Across much of Africa, governments maintain enormous control over land ownership and usage. In some places, you cannot freely leverage land as collateral without navigating layers of bureaucracy. In others, resource discoveries suddenly invite state intervention or outright seizure. This destroys incentives to invest long term. It weakens capital formation. It leaves huge amounts of wealth economically trapped. Yet when this system fails, the answer from many policy circles is still: “more state capacity.” More authority. More planning. More centralisation; as though the problem is merely that the machinery isn’t powerful enough yet.
The same thing happens with monetary policy. Central banks inflate currencies, distort interest rates, erode purchasing power, and quietly transfer wealth toward politically connected institutions. Inflation is not some mysterious economic weather pattern. It functions as a hidden tax. Ordinary people feel it every day when savings lose value and wages buy less; but again, instead of questioning concentrated monetary power itself, many analysts simply argue for more competent management of that power.
This is where I think state-capacity arguments confuse correlation with causation.
Wealthy countries often have large governments today, yes, but many of them became prosperous during periods when markets were comparatively freer, taxes were lower, regulations were lighter, and private capital accumulation faced fewer obstacles. Economic growth didn’t emerge because bureaucracies became all-powerful. Growth emerged because people were increasingly free to produce, trade, build businesses, invest, and innovate.
The prosperity came first. Large states expanded afterward.
The distinction matters.
Africa’s central problem is not that governments lack enough reach into society. In many areas, they already possess far too much control over economic life. Governments control currencies, regulate trade, interfere with agriculture, dominate energy sectors, restrict entrepreneurship through licensing systems, and maintain sprawling patronage networks funded by taxes and debt.
When those interventions fail – as they repeatedly do – the prescription somehow remains identical every single time:
More bureaucracy.
More regulation.
More agencies.
More taxes.
More “coordination.”
At some point, you must ask whether people are mistaking the disease for the cure. Concentrating even greater power inside institutions already plagued by corruption, distorted incentives, weak accountability, and political favouritism does not magically produce prosperity. If anything, it amplifies the damage.
Real prosperity has never primarily come from expanding political power. It comes from ordinary people being free to cooperate, invest, trade, save, experiment, build businesses, and keep more of what they earn.
Societies flourish when productive people face fewer barriers – not when governments acquire more sophisticated ways to manage, regulate, and extract from them.
That’s ultimately my issue with the whole “state capacity” narrative. It assumes the institution causing many of the distortions simply needs to become more competent and more powerful; but a more efficient system of taxation, inflation, regulation, and political allocation is still a system of taxation, inflation, regulation, and political allocation. A sharper knife still cuts.
Africa does not need a more powerful obstacle standing between people and production.
It needs fewer obstacles altogether.
Econ Bro (@EconBreau and @EconBreau2 on Twitter/X) is a Nigerian Austrolibertarian economist and an apprentice at the Mises Institute. Under the organisation name “The Freedom Institute” he teaches individual liberty, personal responsibility, private property rights, free markets, and sound money to mostly young people across Nigeria. Econ Bro is an Associate of the Free Market Foundation.
So true.
This mostly applies to the West. Pacific countries did utilize state directed activities like the Chaebols in South Korea, CCP targets and government exams, Japanese industrialization... in order to to Kickstart growth alongside market activities. Economic freedom indexes cap at average %3 growth for the most economically free but Asia had countries %8 + growth rates with less economically free countries. Africa has terrible ethics and culture built on rent-seeking so market pathways are their only chance.