Driven by some remarkable demographic trends, Africa is a continent with huge economic potential. By 2030, 50% of the continent’s population is expected to live in cities – a huge demographic shift that will bring with it huge opportunities for economic growth. As Richard Dobbs, James Manyika and Jonathan Woetzel of the McKinsey Global Institute recently wrote in their barnstorming new book, No Ordinary Disruption: The Four Global Forces Breaking all the Trends:
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“Throughout history, when people have moved out of farming to jobs in cities, their output has typically doubled. As subsequent generations come of age, their income also increases […] For hundreds of years, people living in cities have enjoyed living standards one and half to three times better than those of their country cousins.” (p. 16)
Indeed, by one estimate, by 2030, African cities will have a combined purchasing power of US$1.3 trillion.
Meanwhile, Africa’s working age population is expected to almost double to 800 million in 2030 and pass 1 billion by 2040 – bucking the general demographic trend towards lower fertility rates and aging populations. In China, for example, the working age population is expected to have dropped by some 151 million to 849 million by 2050, while both Japan and Germany are expected to lose getting on for a third of their working age populations over the same timeframe.
This could mean that the continent is on the cusp of an economic boom similar to that experienced by China over the past decade. Importantly, it could also turn Africans into serious consumers of the natural resources with which the continent is so blessed (some 40% of the global total). That would mark a fundamental change to the African mining industry, which – with some notable exceptions – generally digs it up and ships it out.
But there are significant challenges ahead. For starters, Africa is not a single entity but fractured into over fifty different countries and many more ethnic groups and cultures. Each country brings with it its own political and regulatory regime – a problem even if these were all governed well, which they are not. Industrial infrastructure is also woefully lacking and the continent remains dependent on foreign investment.
In the resources sector, there is a glimmer of something different. The African Mineral Development Centre (AMDC) has been established to promote the transparent, equitable and optimal exploitation of natural resources by changing the vision of the sector from one of secrecy and isolation to one with broader links to the wider African economy. As Dr Kojo Busia, Senior Mineral Sector Governance Advisor at the AMDC said at the recent Mining on Top Africa summit, it is “incumbent on us to reverse the paradox of Africa’s mineral wealth and material poverty.”
In Kenya, this approach has seen a new mining law establish a web-based system for mining concession applications (avoiding a key opportunity for corruption), reform of mining royalties to deliver more back at the local and county level and revoking licences in which no development was taking place to combat the practice of speculative license acquisition. A good start – but one the must be repeated content-wide to make sure Africa does not squander the unique opportunity created by its demographic windfall.