Realizing Africa’s Potential – Part One

This is the first of a two-part series on what it might take for Africa to thrive in the 21^st century and realize its full potential to be a major participant in the world economy. Healthy African supply chains, populations, and governments will be key to ensuring the prosperity of the whole planet throughout this century, as Africa possesses vital natural and human resources that the rest of the world will desperately need.

Will This Be Africa’s Century?

Some have declared that this will be the “Chinese Century”. However, this view has diminished somewhat in recent years due to A) China’s demographic challenges (a dramatically shrinking, aging population), B) increasing friction with western economies and the resulting drive to decouple from China’s economy, and C) China’s leadership (Xi in particular) increasingly prioritizing centralized party control over all aspects of society, instead of allowing innovation and growth to blossom.^[1]

Africa’s Immense Natural and Human Resources

Now others (e.g., IMF, OECD, FT, WEF)^[2] are talking about this being the “African Century”. Africa has tremendous untapped potential, possessing abundant natural and human resources. Africa is the second most populous, youngest, and fastest growing continent, with over 1.4 billion people today, expected to grow to 2.5 billion by mid-century and 4.3 billion by the end of the century.^[3]

Africa has enormous natural resources: 65% of the world’s arable land, 30% of the world’s overall mineral reserves (including 90% of the world’s chromium and platinum reserves, and 75% of global cobalt production), 70% of global cocoa production, half of the world’s sorghum and millet, 12% of the world’s oil reserves, and 8% of natural gas reserves.^[4]  It possesses considerable renewable energy potential—Africa has more solar resources than any other continent (over 85% of the continent receives >2,000 kWh/m²/year),^[5] as well as considerable wind power density potential across the entire Sahara region.

African Tailwinds: Clean Energy, Decoupling, the Relentless Search for Low-Cost Labor

Massive global investments (tens of trillions of dollars over the next three decades) will be made in global decarbonization and clean energy to counteract climate change. The production of batteries and electric vehicles, hugely expanded grid transmission and distribution systems, solar panels, wind turbines, and other clean energy technology require tremendous amounts of minerals that Africa has in abundance, such as copper, cobalt, lithium, gold, manganese, nickel, platinum, graphite, neodymium, samarium, and yttrium. Thus, Africa is a natural place to turn to for the resource extraction necessary to tackle climate change.^[6]

The trend to “decoupling”, i.e., diversifying away from China as the sole ‘manufacturer for the world’, seeking low-cost labor manufacturing capabilities elsewhere, also has the potential to greatly benefit Africa, given their youthful, growing, ambitious population. Regions with shrinking populations (e.g., practically all industrialized nations) will increasingly need to tap into the African workforce.

African Entrepreneurship

The people of Africa have repeatedly demonstrated remarkable initiative and entrepreneurship. Three separate unrelated research studies—by 1) Stanford University/TEF, 2) the African Development Bank, and 3) The Global Entrepreneurship Monitor^[7]—independently concluded that Africa has the highest rates of entrepreneurship of any continent, as well as the highest rate of female entrepreneurship. The ADB study found that 22% of the working-age population (and 27% of working females) had started a business.

A hopeful example of overcoming adversity is found where nearly 1.5 million people live crammed together in the slums of Nairobi Kenya. Story after story of grassroots organizing and pulling themselves up by the bootstraps are found there, in spite of the overwhelming challenges. For example, in the New York Times piece This Kenyan Slum Has Something to Teach the World, the Forbes article How Female Entrepreneurs Thrive in Kenyan Slums, and E4Impact’s Women entrepreneurs in the African slums.

Africa’s Potential within the Global Economy Remains Tragically Underrealized

Despite all this promise, Africa has come nowhere near reaching its potential, for many reasons. A key proximate cause is a severe lack of investment in infrastructure, education, and healthcare by African countries. The primary distal cause is endemic corruption and autocratic rule across much of the continent. Revenue from natural resource extraction and taxation, rather than being invested back into the countries’ futures, are instead being diverted into the private accounts of autocratic rulers and their cronies—the oligarchs, military leaders, criminal gangs, and foreign supporters of illiberal regimes. Africa has the ignominious status of being the most corrupt continent in the world (though Asia and South America are not far behind), according to the ratings in the Corruption Perception Index.^[8]

Corruption and Cronyism Breed Instability

Many countries in Africa have experienced almost unending instability, civil wars, and attempted coups. According to the Fragile States Index, which measures risk and vulnerability in 179 countries, 70% of the world’s thirty most fragile states are in Africa.

Sub-Saharan Africa is plagued by a constant onslaught of coup attempts and civil wars. Recently, this includes the horrific civil wars in Sudan and the Tigray region of Ethiopia. According to the head of the Crisis Group think tank “The bloodiest war in the world last year was not in Ukraine but in Ethiopia”.^[9] Civil wars, corruption, and weak or nonexistent democratic institutions plague much of the continent.

Instability breeds further corruption. The autocrat’s playbook makes this vicious cycle particularly difficult to get out of. Corruption, cronyism, and autocracy frustrate democratic ambitions and free speech, while making it extremely difficult to earn a decent living honestly. This breeds hopelessness, enticing young men, who see honest work as futile, to view the path to mammon in joining Jihadist organizations or criminal gangs where pillaged wealth accumulates.

Autocratic regimes are subject to insurrection and coups by dissatisfied populations and greedy rivals. To deter and thwart attempts to overthrow them, autocrats double down on the playbook, crushing dissent, encouraging mutual spying and distrust between potential adversaries.

Many factors foster continued instability in Africa. High among them is meddling by foreign powers, particularly China and Russia, who see opportunities to exploit Africa’s resources by propping up autocratic leaders, thereby increasing those rulers’ dependency on the support of China or Russia to maintain their own grip on power.

While Africa has 17% of the world’s population,^[10] it only attracts a meager 5% of the world’s foreign direct investment.^[11] In spite of Africa’s enormous potential for growth, businesses are loathe to invest in an environment where the country’s own government is not investing in infrastructure or education, where property rights are uncertain, bribery and corruption are rampant, and governments are unstable. The risks and uncertainty are just too high to make it worthwhile for many businesses.

In Part Two of this series, we examine the short- and long-term impacts of the Russo-Ukrainian war on African supply chains, why a decisive Ukrainian victory might help diminish the cycle of corruption and autocratic rule in Africa, and what else it will take to realize the full potential of the African Century.