Africa’s economy: what’s next for the cradle of humanity?

The role that Africa’s economy will play in geopolitics in the coming years cannot be underestimated. The African continent has 1.3 billion people, one-sixth of the world’s population, and has 54 votes in the United Nations, according to the organization itself.

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The strengths of Africa’s economy include fossil fuel reserves, strategic minerals, an economically active population and great potential for energy transition.

Fossil fuels in Africa’s economy

Africa has almost 10% of the world’s proven natural gas reserves, with 18 trillion cubic meters in 2020. The country with the largest reserves is Nigeria, which has 31% of the gas in African territory, i.e. 5.5 trillion cubic meters.

It is followed by Algeria with gas reserves of 4.5 trillion cubic meters, 25%, and Mozambique, which has 2.8 trillion cubic meters, 16% of the African total, according to CIA Factbook figures.

In terms of oil reserves, Africa holds 8% of the world’s total. That is to say, it concentrates 127,291 million barrels of the 1.6 trillion barrels that the world has.

In addition, 10 African countries are in the top 40 oil producers, according to Statista.

Libya has 38% of African reserves with 48,360 million barrels. In oil reserves, within Africa’s economy, Nigeria follows with 29% of reserves, 37.449 billion barrels, and Algeria, with 9%, has 12.199 billion barrels, according to CIA Factbook data with 2020 information.

Africa’s economy is a major source of minerals

The African continent has 30% of the world’s mineral reserves, according to the EFE agency. Gold stands out, accounting for 40% of world stocks, and four countries in Africa’s economy are among the top 15 gold producers in the world.

Africa’s economy is also important for its reserves of so-called “critical materials”, a group of minerals whose stocks have a very specific and limited geographic location.

To give a few examples, Congo has 70% of the world’s cobalt (used for rechargeable batteries); South Africa has 36% of manganese and 89% of iridium; and Mozambique 13% of graphite, according to the International Renewable Energy Agency.

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People are one of the strengths of Africa’s economy

Africa’s population is currently young. According to the United Nations (UN), 70% of the continent’s people are under 30 years old and, according to the European news portal Atalayar, in the next 20 years Africa will be the continent with the largest population between 20 and 40 years old.

Thus, by 2033 Africa’s economy will have the largest number of economically active people among all continents, according to UN projections.

According to researcher Monica Amador, from the University of Bristol in the United Kingdom, in 2033 “there will be more people of working age in Africa than in China and India”.

By 2050, one in four of the world’s inhabitants will be in Africa, and by 2100, five of the world’s ten most populous nations will be African, according to the Atalayar portal. It is expected that 80% of this population will reside in urban areas.

Africa’s economy has potential, but no support for energy transition

In addition to strategic minerals, Africa’s economy has great potential for energy transition.

According to Monica Amador, the continent has the potential to produce 40% of the world’s solar energy and is expected to “produce 10% of wind energy by 2050”.

What has prevented Africa’s economy from deploying its full capabilities is the lack of international support. According to the United Nations, between 2000 and 2020 only “2% of global investment in renewable energy went to Africa”.

Africa has an annual financing gap of USD $90 billion to meet its energy transition goals, according to 2022 data from the African Union (the umbrella body for African countries).

For Enrique Daza, director of Cedetrabajo, this situation is part of the global hegemonic model in which underdeveloped countries provide raw materials to advanced economies without receiving fair compensation.

“Africa’s economy has been subordinated to the interests of Europe, the clearest example being the 14 countries that are tied to the euro with the African financial community’s franc”, explains Daza.

Although international aid is insufficient, the African continent has increased its relations. According to The Economist, from 2010 to 2016, more than 320 embassies were opened in Africa, which represents the highest number of embassy creation in less than a decade in all of history.

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