The Brilliant Potential of Africa

The continent holds magnificent potential in various economic areas. In addition to its demographics and abundance of natural resources, which act as true assets for this coveted gem, in the coming decades, the African continent promises a skilled workforce and unique inputs to project itself as a global power.

26 July 2023

The abundance of strategic resources, coupled with favorable demographics and attractive growth prospects, will grant Africa and its leaders the necessary influence to be considered a valid voice in the world. Although internal political volatility and uncertainty continue to cloud the outlook to some extent, there have been improvements in governance and democratic reforms in several countries. The World Economic Forum (WEF) asserts that “in the coming decades, Africa will become a key player in international affairs. The rivalry between the United States and China for the drive towards zero carbon emissions will be key catalysts in transforming the continent into a geopolitical pivot point.”

Macro-economic and demographic outlook: Africa’s population is projected to reach 2.5 billion people by 2050, making up a quarter of the global population. According to a study by Ernst & Young (EY), sub-Saharan Africa will soon be the only region with birth rates at or above replacement level, while major economies such as China, the United States, and Europe experience significant demographic declines.

The same study also revealed that the average age of the continent is 18 years, which is 14 years younger than any other region in the world. As a result of this favorable demographic, it is expected that the African middle class will reach 1.1 billion by 2060, compared to the 355 million in 2010. On the other hand, a McKinsey study revealed that by 2030, 250 million Africans are expected to have consumer spending of $3 trillion.

E-commerce: E-commerce is growing across the continent, and analysts predict that internet users will grow from 520 million in 2021 to over 850 million by 2030. Policies to accelerate these trends will differ from country to country. For example, in Ethiopia, there is more government involvement in this model compared to Ghana and Kenya.

Rich in strategic resources: The African continent holds 30% of the world’s mineral reserves, and demand for metals is expected to reach 315,000 tons by 2030, more than double the volume in 2021. The urgency to increase exploration efforts for these strategic resources is proportional to the commercial opportunities presented in their excavation.

The diverse use of these metals in strategic industrial products with military and consumer-oriented defense applications is driving foreign powers to intensify efforts to secure them. The Democratic Republic of Congo alone holds over 70% of the world’s cobalt, a highly versatile metal with numerous commercial applications and a fundamental input for the production of lithium-ion batteries for electric vehicles. Leveraging this demand to generate income that can be used to fund development objectives will be crucial if African countries want to achieve socio-economic stability.

Obstacles such as war, poverty, and corruption: Despite the brilliant prospects for the continent, intraregional conflicts, widespread poverty, and corruption that hinders growth remain obstacles. According to the Geneva Academy, Africa ranks second in the number of armed conflicts by region, with “over 35 non-international armed conflicts” currently ongoing.

Sixty percent of the population lives in poverty, and despite structural shifts towards services, the real productivity of the sector lags significantly behind its emerging market peers. Currently, Africa has the highest proportion of extreme poverty rates globally: it is home to 23 of the 28 poorest nations in the world, experiencing extreme poverty rates exceeding 30%. Sub-Saharan Africa, in particular, suffers from rampant corruption, which exacerbates existing structural challenges of poverty and suboptimal productivity. Additionally, the diversion of state resources for personal gain under authoritarian regimes not only undermines democracy and security but also hinders economic growth and discourages foreign investment.