Can Africa rise from the ashes?
Africa must leverage its unique resources to rise from the ashes and embrace opportunities.
Despite its historic struggles, Africa possesses untapped strengths and abundant resources that many advanced economies lack. From its vast natural wealth—including critical minerals essential for the global green transition—to a burgeoning young population, Africa has a unique opportunity to reshape its future. As the continent navigates obstacles like political instability and lagging productivity, it must seize opportunities to foster economic progress and improve self-reliance.
AFRICA’S STRENGTHS AND RESOURCES.
Africa must leverage its inherent strengths and plentiful resources to carve out a path of economic progress.
Natural Resources: Africa is blessed with a wealth of natural resources. It possesses approximately 30% of the world’s known mineral reserves including gold, cobalt, and diamonds. It is also home to abundant supplies of materials that are critical to the green transition, such as manganese, cobalt, and iridium. Historically, Africa has been stuck in the role of extracting and exporting raw materials; however, value addition is imperative to unlock the true potential of these resources. With the right infrastructure and trade policies, these purely extractive industries can make way for local industries that process and export finished goods.
For example, Botswana has set up its own diamond-cutting and polishing industries instead of only exporting rough diamonds. Developing regional value chains can help retain wealth within the continent, create jobs, and improve standards of living.
Youth Cohort: As many advanced economies grapple with labour shortages, Africa will soon be home to the world’s largest working-age population and an expanding consumer class. By 2050, Africa’s workforce will comprise at least a quarter of the global total. Africa’s sizable population of young people can not only provide affordable labour and serve as a talent pool; they can also drive demands for goods and services. However, education and training are essential to ensure that the growing population of youth becomes a boon and not a bane.
Thriving Role Models: Africa is a tapestry of different economies. While the continent’s economic growth sputtered over the last decade, the economies of many countries exceeded the continent’s average growth rate from 2000 to 2019. These economies offer important lessons and provide role models of thriving cities. These countries that are home to these cities have witnessed a rapid growth in investments, exports, and urbanization.
Technology Boom: Like India, Africa is witnessing a boom in the digital economy with rapid growth in mobile device penetration, fintech, and e-commerce. Mobile money services such as M-Pesa in Kenya have transformed financial services. The tech startup ecosystem seems to be thriving, especially in countries such as Nigeria, Kenya, and South Africa.
Advancing Services Sector: The African economy turned significantly towards services over the past 20 years as people increasingly moved from rural agricultural work to urban service jobs. Services have turned out to be a major driver of economic output and employment and the sector contains further substantial opportunities for African countries provided that productivity improves.
LOOMING CHALLENGES.
Africa faces several challenges to its economic progress, including existing and upcoming challenges.
A Volatile Global Economy: Africa is highly exposed to global shocks such as fluctuating commodity prices, global recessions, and changes in trade and economic policies of major powers. This is because it heavily relies on commodity exports and volatile markets. Almost half of African countries rely on oil, gas, or minerals for at least 60% of their export earnings. Diversifying exports and promoting intra-African trade can help stabilize sources of revenue. High costs caused by weaknesses in infrastructure as well as information and communications technology make trade more expensive, particularly for landlocked countries. These high trade costs limit the competitiveness of goods.
Increasing Political Instability: Political instability (evidenced by factors like coups and regional or ethnic conflict) is prevalent across the continent and continues to grow, even in faster-growing economies, according to a report by Brookings (January 13, 2025).
Slowing Economic Growth: Africa’s economic growth has experienced a notable decline since 2010, under the influence of various factors including reduced global demand for commodities. During the period from 2000 to 2010, the continent’s real GDP—adjusted for inflation—expanded at an impressive average annual rate of 5.1%.
However, this momentum slowed considerably over the subsequent decade, with growth decelerating to an average of 3.3% per annum. Currently, approximately 60% of Africa’s population continues to live in poverty, per capita income increasing by an average of just 1.1% annually over recent decades.
Nonetheless, these aggregate figures do not fully capture the economic progress achieved by several African nations. Certain countries have demonstrated significant productivity and growth, standing as examples of economic resilience and opportunity across the continent.
Lagging Productivity: Although service jobs are generally associated with high productivity, the actual productivity levels within Africa’s services sector remain comparatively low. A substantial proportion of individuals transitioning from rural agricultural employment to urban jobs have largely found themselves in low-productivity service roles.
The services sector holds considerable potential for African nations to enhance economic output and generate employment opportunities. However, to fully realise this potential, it is imperative for Africa to focus on improving productivity across both its services and industrial sectors.
Climate Change Risk: Higher weather and climate variability are disrupting lives and economies. It is estimated that by 2030, up to 118 million extremely poor people in Africa will be exposed to drought, floods, and extreme heat. A 2021 report by the World Meteorological Organization estimates that investment in climate adaptation for sub-Saharan Africa will cost between $30 to $50 billion each year over the next decade.
FOSTERING GROWTH AND ECONOMIC DEVELOPMENT.
Africa can leverage its resources and seize opportunities to strengthen its economy and progress.
Investing in Resources: Extraction will continue to contribute significantly to the continent’s economic development. It is therefore important to increase investment in this industry to make it more productive. For example, as the green transition takes place, Africa is poised to become a key supplier of critical materials; however, the “resource curse” shows that benefitting from abundant natural resources is not a given. Africa should harness the lessons it has learnt from its history of extraction to establish best practices and streamline governance related to this field. This will help ensure that vast natural resources can be used to distribute prosperity more effectively and in a way that minimizes environmental impact.
The Digital Opportunity: The digital revolution is an undeniable force reshaping industries and economies worldwide. Across sectors, digital technologies have the potential to enhance competitiveness, elevate customer experiences, and significantly boost productivity. Moreover, digital tools play a crucial role in strengthening governance, facilitating efficient revenue collection, and improving service delivery.
Central to harnessing these benefits is the development of a digitally skilled workforce. This is not only essential to meet evolving local and global demands but also presents a substantial opportunity for job creation. According to a Brookings report (January 13, 2025), the digital economy could generate up to 230 million direct digital jobs, alongside numerous additional roles indirectly created across related sectors. Investing in digital skills, therefore, is pivotal for sustainable economic growth and global competitiveness.
Regional Cooperation: Regional cooperation can help with crucial functions like risk management and boosting African manufacturing and production. For instance, governments can pass measures to incentivise production in the region. Regional funds can be set up for risk management along with early-warning systems for trade-related risks. Trade finance mechanisms can be established to support businesses reeling from global shocks and help them shift to regional markets.
The Green Transition Opportunity: The global green transition represents a shining opportunity for Africa, which it will do well to capture. Africa has what the World Trade Organization refers to as a “green comparative advantage”. It has over 60% of the world’s potential in solar energy and also has substantial wind, and geothermal power resources as well as other renewable resources like green hydrogen. Additionally, the continent is home to a substantial share of critical minerals. It accounts for over 40% of the global production of cobalt, manganese, and platinum. These minerals are mostly exported as unprocessed ores.
To channel and realise its green potential, Africa needs to aim to process these minerals and add value. This will not just help ramp up renewable energy capabilities but will also improve the quality of the continent’s trade and generate thousands of jobs. This will enable Africa to join the global green economy, participate in global supply chains for green products, and attract more global investment. Currently, Africa attracts only 2% of global investment in renewable energy. It will have to secure the important ingredients of capital and technical expertise for this. Climate technologies have high initial costs and finance is key for climate projects.
The Private Sector’s Power: Large private enterprises play pivotal roles in driving economic growth, innovation, employment, exports, productivity, and tax contributions. In 2022, Africa was home to approximately 350 companies generating over $1 billion in revenue, with over 80% of these enterprises being privately owned.
To enable the private sector to spearhead economic growth across key industries, it is essential to mobilise capital, foster innovation, and develop critical infrastructure. The private sector will be instrumental in generating employment opportunities, attracting investment, and nurturing talent.
Governments can stimulate private sector growth by offering tax incentives and providing access to affordable loans for firms investing in regional manufacturing. Additionally, leveraging both public and private resources for contingency planning and insurance can strengthen economic resilience and support sustainable development.
Consuming and Manufacturing: Africa’s rapidly growing young population, similar to that of India, holds significant potential to drive economic growth through increased consumer spending. By 2030, approximately 250 million Africans are projected to join the consumer class. Sustained economic growth has the potential to empower nearly one billion Africans, enabling them to achieve self-sufficiency in essential areas such as nutrition, energy, housing, healthcare, and education. This empowerment would expand the consumer base, thereby encouraging higher consumer spending and allowing businesses to offer affordable prices at scale while maximising local value chains.
Enhancing manufacturing output for both local and global markets will present Africa with a strategic opportunity to boost its productivity and meet substantial domestic demand. A targeted approach—identifying key products required by African countries and aligning local manufacturing to meet these needs—can significantly enhance productivity and promote self-reliance. According to the World Economic Forum (September 28, 2023), if African nations were to match India’s production rates for domestic markets, they could generate an additional $140 billion in economic value by 2030.
Synergia Takeaways:
• Africa is armed with a wealth of resources and has significant advantages such as opportunities in the green transition and a growing consumer class.
• From focusing on value-adding industries to encouraging regional cooperation, Africa can take measures to strengthen its economic resilience and reduce its vulnerability to global markets.
