15 Combined Agenda 2063

Introduction/Background

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Theme 1 presents the background and a forecast of Africa’s current development path - how the continent and the 54 states for which we have data are likely to develop. It indicates that, on Africa’s Current Path, the African economy will almost have doubled in size by 2043. But because Africa’s population will have increased by 70% by 2043, gross domestic product (GDP) per capita will have improved by only 40% by 2043. Meanwhile, GDP per capita in the rest of the world, which comes off a much higher level, will have increased by a similar percentage.  On the Current Path things continue to improve in Africa but Africa continues to fall further behind global averages of measures such as GDP per capita that serve as a useful, if imperfect indicator of progress.

Subsequently, various themes modelled the impact of ambitious interventions across different sectors namely: better governance; achieving a demographic dividend and improved health; an African agricultural revolution; a rejuvenation in education; a manufacturing transition; trade integration through the implementation of the African Continental Free Trade Area; large infrastructure and leapfrogging through various technologies; and more financial inflows from aid, foreign direct investment and remittances.

The interventions are carefully benchmarked to ensure that they are aspirational but realistic, comparable to what has been historically achieved by countries at similar levels of development and that have done particularly well in that particular sector. All the interventions commence in 2024 and last to 2033, coinciding with the second ten-year implementation plan of Agenda 2063. We then measure the impact of the scenario to 2043, the end of the third ten-year implementation plan of Agenda 2063.

In addition, two themes discussed the likely implications of the various scenarios on the future of work and the threat of climate change/the additional carbon emissions associated with each scenario.

Development is a messy affair that seldom follows the smooth forecasts set out in this website. Instead it is characterised by ‘persistent failure, wastage, exploitation and misery’.[1C Cramer, J Sender and A Oqubay, 2020, African Economic Development: Evidence, Theory, Policy, Oxford: Oxford University Press, p. 22.] Africa is hugely diverse and the future, as in the past, will reflect large variations in the development trajectories of its constituent countries. It is also highly unlikely that all of Africa will simultaneously advance on all the transitions modelled in the various themes. Some countries may progress in some areas, while others may stagnate or regress. 

Several additional factors not considered in this website are important, of which the impact of determined visionary leadership (and the reverse) is surely the most important. Evidence also suggests that Africa’s small island countries – Mauritius, Cape Verde and Seychelles – have done particularly well because they had high trade or tourist income relative to their population and experienced an early demographic transition. As a result they typically reached health, education and income milestones before more populous states; are more likely, with a youthful population, to progress to liberal democracy and maintain it; are less vulnerable to revolutions; and very rarely engage in interstate conflicts.[2In 2020, the African countries with populations below 5 million were: Seychelles, São Tomé, Cape Verde, Comoros, Djibouti, Eswatini, Mauritius, Equatorial Guinea, Guinea Bissau, Lesotho, Gabon, Botswana, The Gambia, Namibia and Eritrea.]

Africa is diverse, young, rapidly urbanising and its population and economy will grow quite quickly. But will it be sufficient to improve wellbeing? At first glance, the energy levels on the continent are reminiscent of China some decades ago, but with important differences. Emulating China in Africa may not be possible in all respects, but there is much to be learnt and taken from China, most important of which is moving from handouts to empowerment and the dedicated effort to understand, document and help each poverty-stricken household. Thus, ‘the key to getting out of poverty lies in people’s mindsets. China has adopted measures that combine poverty alleviation with efforts to improve people's “will and wisdom” to stimulate the internal motivation of the disadvantaged, so that they can take actions more spontaneously, forming the overall anti-poverty pattern underpinned by ‘social mobilisation + individual progress’.[3Chinese Poverty Alleviation Studies: A Political Economy Perspective, February 2021, New China Research Xinhua News Agency, p 16.] In this manner, China has prevented many of its poor people from falling into a welfare trap where individuals remain economically inactive and dependent upon assistance from government.

Africa’s future will inevitably unfold quite differently from the remarkable development experience of China. So-called Black Swan or unexpected, high-impact events, such as the COVID-19 pandemic, could derail trends. These caveats aside, we term the scenario that brings all the sectoral scenarios together Combined Agenda 2063, after the comprehensive 50-year blueprint that aims to transform Africa into an integrated, prosperous and peaceful continent, ‘driven by its citizens, representing a dynamic force in the international arena’.[4The Agenda 2063 Solemn Declaration was signed by African heads of state and government in Addis Ababa in May 2013, 50 years after the establishment of the Organization for African Unity towards the attainment of ‘an integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena’. Agenda 2063 consists of 20 goals encapsulated in the broader seven aspirations and 15 flagship projects.]

For the Combined Agenda 2063 scenario, it is important to emphasise that improvements in education, for example, would positively impact on social capital (and hence economic growth) and therefore improve productivity in the manufacturing scenario. This holds true across various dimensions. It means that some improvements could have a larger impact, although it is equally true that some interventions also compete with each other. For example, although more large social grant programmes reduce poverty, it eventually starts to detract from economic growth prospects when they reach high levels such as in South Africa (but the relationship is complex).[5On the other hand, over longer time horizons reductions in poverty would improve human capital and eventually have a positive impact on economic growth.]

Development is about countries empowering their citizens and learning how to help themselves. It is perhaps best to view societies like living organisms.[6This analogy was offered by Prof. Jack Goldstone during one of our expert discussion sessions, 18 May 2021.] To grow an organism does not need only a single nutrient; it needs a combination of different nutrients in a proper balance. Increasing any one of them disproportionately provides rapidly diminishing or even negative returns. Societies become productive by linking together different inputs and eventually being able to do more with them, although not necessarily in equal amounts. That is why this site has taken a comprehensive approach to development, examining all aspects and sectors.

The first section below presents the impact of a Combined Agenda 2063 scenario, which includes the integrated impact of all 11 scenarios. We use economic size or gross domestic product (GDP), GDP per capita and poverty rates as shorthand to summarise the impact. While these indicators are imperfect and incomplete measures of development, they remain useful measures through which to gauge Africa’s general direction, and correlated with numerous other indices of welfare. Other variables are considered in subsequent sections.

After assessing the combined impact, we then consider the impact that key individual scenarios (representing different priorities) could have, although much more detailed additional work is necessarily required at the national level.

Given the need for Africa to contribute to mitigate the effect of climate change, a scenario that models the impact of a carbon tax on Africa’s growth prospects is included separately before concluding.

Impact of the Agenda 2063 scenario on economic size

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The Agenda 2063 combined scenario represents a massive boost to Africa’s economic heft. In 2019 Africa had a US$3.1 trillion economy. On the Current Path Africa’s total GDP is likely to be approximately US$8.7 trillion in 2043. The Agenda 2063 forecasts an economy that is 75% larger for that year at US$15.2 trillion. Instead of 5% of the global economy by 2043, Africa’s combined economy would account for almost 9% (Chart 1).

Countries coming off a lower base, often with an associated rapid population growth, see the largest proportional increases in the size of their economies, although not necessarily in average incomes. In 2043, Africa’s 23 low-income countries would have a combined GDP of almost double the forecast in the Current Path. The increase for Africa’s 23 lower middle-income countries is 76%, 37% for Africa’s seven upper middle-income countries and 33% for its single high-income island state (Chart 2).

The same trend is seen at the country level (Chart 3). Looking at the size of the increase of the economies in percentage terms shows that poor countries perform best, with the size of the economies of Madagascar and Malawi increasing by more than 166 and 145%, respectively, while upper middle-income countries such as Libya, Mauritius and Equatorial Guinea see increases just below 30% in the Combined Agenda 2063 Scenario in 2043 compared with the Current Path forecast.

In 2019, North Africa had the largest regional economy given its relatively high levels of development compared with other regions. However:

• In the Current Path forecast, West Africa overtakes North Africa by 2029.
• In the Combined Agenda 2063 scenario, East Africa will be the second largest economic region in 2043.
• Central Africa has a relatively small economy relative to its population size and the economy experiences only a modest increase in the Current Path, but grows much more rapidly in the Combined Agenda 2063 scenario.

The increases in West and East Africa’s economies are largely a function of their larger and more rapidly growing populations.

Comparative impact of scenarios on per capita income

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For all its deficits, GDP per capita reflects not just the economic productivity of an economy but also the number of people among whom that product must be divided. Chart 4 presents GDP per capita for Africa in the Current Path and the Combined Agenda 2063 scenario and compares the outlooks with the Current Path forecast for the rest of the world. It shows in a single graph the dramatic change in fortunes that could follow from the combined effect of the various scenarios modelled in this website. Such long-range forecasts are inevitably highly speculative but illustrate that Africa could actually start to catch up with the rest of the world, although only towards the end of the forecast period. Because of technology, climate change and future shocks, that catch-up will occur in a different world than the one we currently know.

An important dynamic to consider here is how the Demographic scenario combines with the Education scenario (and to a lesser extent with the Health/WaSH scenario) to rapidly reduce total fertility rates. Whereas on the Current Path, the average fertility rate in Sub-Saharan Africa is expected to decline from 4.7 children per fertile woman in 2019 to 3.3 by 2043, the Combined Agenda 2063 scenario projects a decline to 2.4. As a result, Sub-Saharan Africa could, in 2043, have 113 million fewer people.

The impact accelerates over time. In 2063 in the Combined Agenda 2063 scenario, Africa would have a population of 383 million fewer people, but its economy will be 2.5 times larger than in the Current Path forecast.

Regionally, Central Africa performs worst by 2043 and North Africa best, with West Africa showing particular positive momentum in this time horizon (Chart 5). The divergence between Central and North Africa is due to the very rapid population growth in Central Africa compared with North Africa coming off a much higher income, education and health base. The Current Path forecast of economic growth will simply be insufficient to substantially improve the incomes of the rapidly growing populations in the Central African countries.

Central Africa also differs from other regions in that it does not have a locomotive state (such as Nigeria in West Africa and South Africa in Southern Africa), where the size of a single national economy provides a sufficiently large market that could boost the region as a whole (although the full implementation of the African Continental Trade Agreement is intended to address this).

This site often used the four standard World Bank income classifications as a kind of shorthand to present general trends among countries at roughly similar levels of development. In the Combined Agenda 2063 scenario, the average GDP per capita in 2043 would be:

• US$6 500 instead of US$3 790 in low-income Africa
• US$14 170 instead of US$9 142 in lower middle-income Africa
• US$21 985 instead of US$17 734 in upper middle-income countries
• US$33 4091 instead of US$40 330 in Africa’s high-income island, Seychelles.

Coming from a lower base, the relative increase is again more pronounced in low-income countries (72%) than in upper middle-income countries (24%).

The ten countries that would gain the most in absolute increases in average income levels when comparing the Current Path forecast with the Combined Agenda 2063 scenario by 2043 are Namibia, Eswatini, Seychelles, Angola, Libya, Egypt, Nigeria, Equatorial Guinea, Botswana and Malawi. [7Equatorial Guinea is nominally classified as an upper middle-income country, despite its corruption and poverty, and the results for that country are subsequently boosted in the IFs forecasting platform because of the algorithms associated with its income classification. The same holds for Gabon. Both are oil-rich autocracies – each essentially run as a family business and the associated forecasts are therefore likely unreliable.]

The ten countries that show the least improvement in absolute US$ terms are Sierra Leone, Liberia, Chad, Mozambique, Niger, DR Congo, South Sudan, CAR, Somalia and Burundi. All are currently classified as low-income countries.

The impact of the various scenarios also changes over time. For example, what contributes most to income growth in the first decade (to 2033) for low-income countries may change during a second and third decade.

Chart 6 ranks the five scenarios that provide the largest change in GDP per capita in purchasing power parity according to country income groups (Africa’s single high-income island state is ignored in this analysis). The analysis does not imply that policymakers should choose one set of interventions above another. Development is organic; eventually a simultaneous and coordinated effort across dimensions produces much better progress than pushing on any one to the exclusion of another.

From 2024 to 2033, the Agriculture scenario produces the largest increase for Africa, and especially in low- and lower middle-income countries. Talking about the importance of agriculture in Africa has been serious business for several decades, but actually doing something about it is taken much less seriously. Today yields of important crops such as rice and wheat in the USA and parts of Asia have plateaued as the world enters an agricultural revolution driven by intensive farming. The future of farming is increasingly seen as being akin to manufacturing, with innovations such as vertical farming in urban areas and soon the production of meat and other foodstuffs in large-scale laboratories rather than on the farm. Africa is far away from this, but can catch up.

The other scenarios with high impact are Leapfrogging, Free Trade, and Manufacturing/Transfers, By 2043 the Free Trade scenario generally would outpace all other scenarios across all country income categories. It is for this reason that the African Development Bank, the UN Economic Commission for Africa, the World Bank and development economists are so excited about the progress being achieved with the implementation of the agreement and its future potential.

A different way to look at these results is to graph the contribution from each scenario according to income groupings Each graph presents the Current Path GDP per capita forecast and the additional contribution from 12 scenarios (the 11 sectoral scenarios and the synergistic impact of the Combined Agenda 2063 scenario) as the way in which better nutrition, education and health (for example) combine to boost human capital.

Chart 7 shows the early and sustained contribution from the Agriculture scenario in low-income Africa. By 2033, the Agriculture, Leapfrogging and Free Trade scenarios contribute the most to improved GDP per capita. By 2043, Free Trade is most powerful.

Chart 8 indicates that in lower middle-income countries, the contribution from agriculture is most powerful in 2033. It is overtaken by Free Trade, Manufacturing/Transfers and Leapfrogging by 2043.

Chart 9 shows that in upper middle-income countries the contribution from Manufacturing/Transfers is most impactful in 2033. In 2043 the largest contribution is from the Free Trade scenario.

Because of the fertility characteristics of the different income groupings, the contribution of the Demographic scenario declines with increasing income status. Even then its impact is underplayed. Similar to better governance and more stability, the Demographic scenario acts as a kind of force multiplier on all other scenarios, particularly for low- and lower middle-income Africa. It reduces the number of children that need to be educated (and increases the money available for those children already in school) and reduces the demand for basic infrastructure such as water and sanitation, for example.

The impact of the Education scenario increases with higher income status and its impact steadily increases out to 2063. But it takes a very long time, reflecting the inertia in improving education systems and that the payoffs typically take up to a generation to be realised. In fact, the IMF notes that it takes more than 15 years before net national income, the private capital stock, real wages for the poor, and formal-sector employment surpass their counterparts in a programme that invests mainly in infrastructure. [8EF Buffie, LF Zanna, C Adam, L Balma, D Tessema and K Kpodar, June 2020, Debt, investment, and growth in developing countries with segmented labor markets, International Monetary Fund]

As with education, improvements in general indices of health and the provision of WaSH facilities are more important (and impactful) for upper middle-income countries, where the older labour force is better nourished and healthier and, therefore, more productive.

Large-scale infrastructure development does not appear to be a major driver of economic growth in our scenarios, given its role as a facilitator for better trade and general economic activity, some of which is captured in the synergistic effect. Although infrastructure is certainly essential for development, it should not be constructed at the expense of other, often less glamorous line items. Note that water and sanitation infrastructure is included in the Health/WaSH scenario and ICT infrastructure in the Leapfrogging scenario, meaning that the separate scenario on Infrastructure only captures a portion of total infrastructure (essentially general investments in roads, rail and ports). In general, investment in human capital is more effective than investment in infrastructure, in line with findings by the IMF. [9EF Buffie, LF Zanna, C Adam, L Balma, D Tessema and K Kpodar, June 2020, Debt, investment, and growth in developing countries with segmented labor markets, International Monetary Fund]

Impact of different poverty definitions on rates of extreme poverty in the Combined Agenda 2063 scenario

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The Combined Agenda 2063 scenario has an even more impressive impact on poverty than on economic size and GDP per capita. The forecast of the number of extremely poor people in Africa (using the US$1.90 threshold) presented in Chart 10, shows that 35% of Africa’s total population was considered to be extremely poor in 2019, a ratio that will decline to 31% by 2030 and 21% by 2043 on the Current Path forecast. Owing to rapid population growth, relatively slow economic growth and often high levels of inequality, 468 million Africans would therefore still live in extreme poverty in the Current Path scenario by 2043, meaning that the absolute number of extremely poor Africans will have increased from the 455 million living in these circumstances in 2019 although the rate will have modestly reduced.

The impact of the Combined Agenda 2063 scenario is for extreme poverty to decline to 25% in 2030 and 6% in 2043, equivalent to 468 and 136 million people. That is, most likely, an extreme underestimation given the reliance upon a US$1.90 income line.

The first theme on Africa's Current Path used US$1.90 but also applied the four poverty lines as defined by the World Bank for low-income (US$1.90), lower middle-income (US$3.20), upper middle-income (US$5.50) and high-income countries (US$22.70). There we found that an extreme poverty rate of 49% in 2019 was likely more reasonable than the 35% suggested by using only the US$1.90 threshold. Rates of extreme poverty in Africa are, therefore, much higher than the average numbers being used by most analysts.

The rate of 49% in 2019 represents 640 million people. [10The total is made up of: 256 million people in Africa’s low-income countries, 349 million people in lower middle-income countries, 34 million people in upper middle-income countries, and 97 000 people in the Seychelles, Africa’s only high-income country.] Using this data, the Current Path forecast is that the extreme poverty rate in Africa will, by 2043, have declined to 32%. The decline in the Combined Agenda 2063 scenario is that extreme poverty will decline to 13.6% in 2043.

Chart 11 compares the rates on the Current Path forecast using a combination of the four extreme poverty lines in 2019, 2030 and 2043 and compares that with the rate using only US$1.90.

The Combined Agenda 2063 scenario represents a potential seismic shift in Africa’s fortunes, as poverty reduction is perhaps the single most important measure of improved wellbeing. Although extreme poverty will remain a feature of Africa for generations to come, the portion of extremely poor people in Africa will have dropped to 287 million in 2043, compared with the 717 million in the Current Path forecast. Expressed as a percentage of the total population, the rates are 33% (the Current Path forecast using the four rates) vs 13% (the Combined Agenda 2063 scenario using the four rates) in 2043.

It is clear that even in the Combined Agenda 2063 scenario, Africa will miss the SDG target of eliminating extreme poverty by 2030 by a very large margin, no matter which income line is used to forecast rates. Although COVID-19 has contributed to these depressing forecasts, the key reason is that Africa’s economies are not growing rapidly enough given population growth. Although Africa (and Southern Africa in particular) has relatively high levels of inequality, the continent simply has to find ways of growing its economies much more rapidly if it intends to increase incomes, provide jobs and dramatically reduce poverty.

Effect of sectoral scenarios on extreme poverty

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In addition to interpreting rates of extreme poverty using different definitions, it’s also important to explore the impact of the sectoral scenarios on extreme poverty.

Charts 12 and 13 compare the impact on rates of extreme poverty for each scenario with the forecast in the Current Path for Africa’s four income groupings in 2033 and 2043, respectively, now only using the threshold of US$1.90 as defined by the Sustainable Development Goals. These would reflect the end of the second and third ten-year implementation plans of Agenda 2063.

In low-income and lower middle-income countries, the Agriculture scenario has the largest impact in both 2033 and 2043, in part because agriculture constitutes a third of GDP by value in low-income countries, about a quarter in lower middle-income countries and only about 8% in upper middle-income countries

However by 2043, the Free Trade scenario starts catching up, followed by Manufacturing/Transfers and Leapfrogging. Because governments spend significantly more money on basic infrastructure in the Health/WaSH scenario that detracts from other items, extreme poverty increases although the impact reduces over time.

Infrastructure-led growth is one of the least impactful scenarios for poverty reduction, reducing poverty by less than one percentage point by 2043 on average. [11Note that basic health infrastructure is included in the Health/WaSH scenario and that ICT infrastructure and the impact of renewables for energy are included in the Leapfrogging scenario (Theme 9).] If not carefully calibrated, large costly infrastructure projects tend to divert limited resources away from more direct poverty alleviation interventions. Here it is important to point to the need for additional research. Our initial assessment is that the associated expenditure will often not benefit citizens evenly: a major port or hydroelectric power plant may bring jobs to a local area and stimulate the economy, but is unlikely to have much immediate impact on rural communities and its obvious long-term impact is often difficult to quantify. Consider, in contrast, the number of rural schools that could be built and that renewable power systems may be more equitable.

Large-scale infrastructure projects must be done alongside, rather than at the expense of, other, more basic developmental goals and should be based on a careful cost-benefit analysis.

The scenario on manufacturing, included interventions that emulate cash transfers or social grants, which have proven a particularly effective short- to medium-term strategy for reducing poverty and inequality. The bundling is based on the experience that the early stages of industrialisation are often accompanied by large increases in inequality and even poverty, because limited resources are diverted into capital-intensive projects and away from consumption.

However, the provision of social grants is a more impactful strategy for upper middle-income countries, which generally cannot lever off a large agricultural sector as a means towards poverty reduction. The general tendency in many North African countries has been to subsidise fuel and foodstuffs, but these tend to lock governments into expensive programmes that they then find impossible to retreat from.

It is for this reason, and also because of the market distortions such subsidies can create, that the World Bank and the IMF generally target the reduction of fuel and food subsidies as a key component in their assistance strategies and have grudgingly come around to support cash grant systems.

Poor countries generally have limited financial means to effect substantive transfers to the poor through social grant programmes, but it remains a strategy that is particularly well suited to countries that discover new mineral resources, such as the gas potential of Tanzania and Mozambique. In these countries, the idea of ring fencing natural resource income for distribution as cash grants rather than through subsidies on fuel and food that are more prone to wastage and cause inefficient distortions in the market would have a salutary impact on levels of extreme poverty.

A standard model of development?

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Charts 12 and 13 reinforce the traditional sequencing of development also discussed in the theme on governance, namely that a governing elite strongly committed to economic growth is needed to starts the developmental transformation process, with a focus first on agriculture (to provide sufficient nutrition and food security), basic education and literacy (to improve human capital).

Underlying much of this is the need for Africa to progress more swiftly through its demographic transition by empowering women, rolling out modern contraceptives, investing in female education and managing deliberate urbanisation. Although Africa is urbanising, it is generally not planned or maximised, and in many Africa countries (e.g. Liberia, Madagascar and Zimbabwe) there is currently no correlation between urbanisation and structural economic transformation.

As most African governments do not have the means to invest in the dense network of transport systems required for such sprawling cities, poorly constructed and poorly maintained roads are crowded with cars and other means of private transport. The result is that the city sprawls out further and further, lowering urban density and increasing the potential cost of providing the required additional infrastructure. Consequently, instead of increasing productivity and access to services – one of the main advantages of urbanisation – these measures actually start to decrease. [12P Collier, 2016, African urbanisation: An analytic policy guide, London: International Growth Centre, p. 23]

Without economic growth and rising incomes, cities become poverty traps. Some African countries (e.g. Tunisia) are already largely urban, but East Africa is probably the most rural region in the world. Here the growth of a city such as Addis Ababa has become a major source of tension as urban sprawl encroaches on surrounding Oromo farmland.[13For example, see: Y Tsegaye, 21 June 2021, Pushing boundaries in Ethiopia’s contested capital, Ethiopia Insight]

Digital solutions can contribute to the provision of basic services in poor urban communities through pay-as-you-go models that allow low-income customers to make small, incremental payments towards otherwise unaffordable goods and services, including water, clean cooking gas and sanitation. The result is a sustainable business model able to respond to the challenges of the urban poor and urban poverty traps. [14For example, see: Groupe Speciale Mobile Association, 10 March 2020, Digital solutions for the urban poor, Mobile for Development Utilities] Managed correctly, urbanisation represents immense opportunity.

The solutions to Africa’s urbanisation challenges are well described:

• Without clear legal rights and a formal property market that allows for the secure transfer of property rights, land cannot serve as a tradeable asset and investments are limited to those done by the state. Digitisation and modern technology allow Africa to do much of this more rapidly than is the case historically anywhere else. This also holds for the agricultural sector.
• Early installation of infrastructure such as roads, water, sewage and electricity connections needs to happen at low levels of density. Where this is not possible, using modern technology can help to overcome the deficits in crowded settlements. Urbanisation serves as an opportunity to build climate resilience and to manage the spread of infectious diseases such as COVID-19.
• Cities develop if they are able to crowd larger numbers of inhabitants into formal systems, hence increasing the tax base and improving efficiencies and productivity. Cities that are overcrowded or characterised by low-rise informal housing and urban sprawl have higher costs of production and generally struggle to produce internationally traded goods.

Ideally basic infrastructure must largely be put in place before people arrive. Once an informal settlement has reached the size of Khayelitsha in Cape Town or Kibera in Nairobi, it is very difficult to uproot populations to install plumbing or build proper roads. Providing water and sewer connections for half a million people is a challenging enough task. However, if all these people must be relocated to provide that infrastructure, it is not only significantly more expensive, but also more difficult on a political level. Modern technology can help by combining smart metering, pay-as you-go services, big data, geolocation and the Internet of Things to establish smart grids, solar home systems, mapping sanitation facilities, monitoring decentralised water points, operating water ATMs in informal settlements, mitigating peak traffic flow and managing waste flows. That is because, as an enabler, the ICT sector has strong backward and forward linkages with almost every sector of the African economy in need of rapid development ranging from increasing yield in agriculture, to electricity and water demand management, and e-learning in the educational sector.

Urbanisation, digital transformation and electrification using pay-as-you-go services should therefore be adopted as deliberate strategies towards providing basic services, better education, improved healthcare and educational opportunities. The digital transformation of Africa will require huge investment to make the Internet accessible but there is real potential in initiatives such as those from SpaceX or OneWeb that promise global satellite Internet coverage within the next few years. [15A Moya, 28 May 2019, How Africa can tap into SpaceX’s Starlink satellites, itWeb]

In addition to the management of urbanisation, successful governments typically pursue low-end manufacturing, even as the educational focus now shifts to secondary, vocational and tertiary education. Entry into manufacturing requires participation in regional value chains, the need to attract foreign direct investment and foreign companies, with clear incentives for them to build local capacity and ensure technology transfer.

Because of the dire impact of climate change but also because of the enabling dynamic of digital and other technology, Africa needs to look at modern manufacturing and seek competitive advantages in areas such as ICT, food processing and industries without smokestacks that can play a role analogous to that of manufacturing in East Asia. [16The notion of ‘industries without smokestacks’, advanced by the Brookings Institution, argues in favour of sectors that are tradable, employing low- and moderately skilled labour, having higher-than-average value added per worker, exhibiting capacity for technological change and productivity growth, and displaying evidence of agglomeration economies. See: R Newfarmer, J Page and F Tarp, 2018, Industries without Smokestacks: Industrialisation in Africa reconsidered, WIDER Studies in Development Economics, Oxford University Press] As countries go up the manufacturing value chain, the spillovers from manufacturing facilitate and incentivise a more productive agricultural sector and the development of higher-end services such as finance until, in some instances, services start to serve as the main engine of growth, or agriculture (such as in the Netherlands). Typically large-scale commercial agricultural development and exports are dependent upon progress with industrialization. Thus, according to Erik Reinert ‘no country without an industrial sector … has ever managed to raise the wage level of its farmers.’ [17ES Reinert, 2007, How Rich Countries Got Rich … and Why Poor Countries Stay Poor, London: Constable, p. 63]

It is likely that the point at which services play a larger role in economic development has been significantly advanced as a result of the impact of COVID-19. In fact, COVID-19 may have unlocked productivity improvements in mid- to high-end services to an extent similar to the communications and IT revolution that allowed the creation of complex global value chains in the manufacturing sector some decades ago. Africa’s future too will be dominated by the services sector.

The broad outlines presented here serve to frame a kind of ‘standard template’ of development. It requires leadership committed to evidence-based policies on development.

The role of leadership and government is important throughout, but is particularly crucial at low and middle levels of development. Then, as countries go up the income ladder, economic growth in the 21st century becomes increasingly dependent on the role of the private sector for growth. The government’s role remains crucial, although it should shift to a predominantly regulatory and compliance function at this point while ensuring inclusive growth by progressive tax policies, support to rapid growth efforts (particularly manufacturing) and other measures of redistribution.

A recent, widely acclaimed study identifies the share of investment as crucial, indicating that investment should proactively be directed towards activities with high potential for increasing returns of scale and scope, raising demand for labour, and for earning foreign exchange. [18C Cramer, J Sender and A Oqubay, 2020, African Economic Development: Evidence, Theory, Policy, Oxford: Oxford University Press, p. 9.] Elsewhere the authors argue in favour of rapid export growth, a modestly undervalued exchange rate and an ambitious global trade strategy. They argue that a country’s prospects ‘are not determined by what that country has and is … instead, a country’s prospects are determined by what a country does …’ [19C Cramer, J Sender and A Oqubay, 2020, African Economic Development: Evidence, Theory, Policy, Oxford: Oxford University Press, p. 10] For these authors, as in our analysis, leadership, capable government and expanding wage employment (more and better jobs in the formal economy) lie at the heart of improved prospects.

Structural change of economies in the Combined Agenda 2063 scenario

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The transitions modelled in this website are intended to emulate a developmental path where Africa is able to reverse its growing commodities dependency and proceed to inclusive and rapid development by building human capital and through economic diversification. In this vein the African Growth Initiative at the Brookings Institution popularised the potential of ‘industries without smokestacks’, pointing to the potential of cut flowers and other high-value agriculture, tourism, business and other tradable services as having productivity improvement effects in a modernising economy comparable to traditional industrialisation. [20R Newfarmer, J Page and F Tarp, 2018, Industries without smokestacks: Industrialisation in Africa reconsidered, WIDER Studies in Development Economics, Oxford University Press]

To this end Charts 14–18 present the size and changes in the growth of the six economic sectors modelled in IFs, namely agriculture, energy, materials, manufactures, services and ICTech for Africa’s different country income groupings (excluding the single high-income island state, Seychelles).

Chart 14 presents the composition of GDP and the absolute size of each sector for low-income Africa.

The sectoral shift in economic composition from 2024 (the start of the interventions) to 2043 for low-income Africa is reflected in Chart 15. The scale on the y-axis indicates that the shifts are at a maximum amplitude of five percentage points in either direction, but the impact of compound interest is such that these changes have a large impact over time, evident from the stacked columns reflecting economic size in Chart 14. The initial rapid growth of the agricultural sector is eventually dwarfed by growth in services. The ICTech sector also shows modest growth. All other sectors decline in their contribution to GDP although all increase in size.

Chart 16 presents the composition of Africa’s 23 lower middle-income economies in 2019 and 2043 in the Current Path and the Combined Agenda 2063 scenario. General trends are similar to low-income countries’ and are therefore not shown in a separate chart.

The changes in the sectoral composition for upper middle-income Africa are different and presented in Charts 17 and 18. Chart 17 represents a snapshot of the situation in 2019 and in 2043 in the Current Path and Combined Agenda 2063 scenario, with trends shown in Chart 18. Initially the manufacturing sector grows more rapidly, but it is later overtaken by growth in the services sector.

However, two caveats need to be considered when reflecting on these results. The first is that Gabon and Equatorial Guinea both have very skewed economic structures, discussed in the geographic country forecasts for those countries. The second is that our interventions are from 2024 to 2033, and then maintained to 2043. So, one reason for the drop-off with the contribution of manufactures is that the intervention does not increase after 2033.

It is evident from Charts 14, 16 and 17 that all sectors in Africa’s 2043 economy will be bigger in the Combined Agenda 2063 scenario than in the Current Path forecast for that year.

At a continental level (i.e. the average for Africa’s 54 countries), the Combined Agenda 2063 scenario initially modestly constrains the growth of the services sector in favour of growth in the size of the agricultural sector, but from 2027 the services sector grows more rapidly than any other. The Combined Agenda 2063 suggests an end in the premature deindustrialisation of Africa, with a marginal increase in the contribution of the manufacturing sector to Africa’s GDP by more than one percentage point by 2043. Overall, Africa will have a growth trajectory dominated by services, which traditionally has lower transformative productivity potential than a manufacturing growth trajectory.

Whereas the services sector currently constitutes about half of the African economy, it would be 60% by 2043, closer to the average forecast for the rest of the world (about 58%). The contribution of the agricultural sector to GDP in the rest of the world slowly declines (from 4% to 3%). In 2019 it was just below 16% in Africa, declining to 7% in the Current Path and 6% in the Combined Agenda 2063 scenario.

The impact of the scenarios is for African economies to become more productive, with considerable growth in the services sector, in line with global trends. But none of this will happen by itself. It requires appropriate policies that support local industry or at least the transfer of knowledge to local industry, determined implementation and productive investment.

The impact of a carbon tax

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Climate change is undoubtedly the most important long-term development challenge facing humanity. There is a rich irony in the extent to which the African continent, through its human and other resource endowment, has enabled development elsewhere, and may now find its own developmental future inhibited by the impact of climate change. The choice of Africa’s growth path will impact on global carbon emissions and hence on changes in temperature, precipitation and greater variability of extreme weather events. It is therefore important to examine, from a carbon emissions perspective, whether a growth pathway such as a traditional manufacturing transition is viable.

The theme on climate change presented the carbon emissions associated with each of the 11 scenarios modelled in this website. It also set out the extent to which Africa will suffer from the impact of climate change. In fact, there is a real chance that Africa’s development will be severely constrained by climate change, as scenarios with substantial growth potential (e.g. the implementation of the African Continental Free Trade Agreement and Manufacturing/) all have significant carbon emissions. Put differently, Africa needs to get on top of its demographic dividend and pursue the transitional presented in the Leapfrogging scenario if it is to grow sustainably.

In summary, the improvements in Africa’s development prospects in the Combined Agenda 2063 scenario come at a substantial carbon cost, even as the carbon intensity of GDP growth in Africa declines in line with global trends. In the Combined Agenda 2063 scenario, Africa would release about 270 million tons more carbon into the atmosphere by 2043 than in the Current Path, with emissions subsequently growing rapidly as growth (and the size of the African population) accelerates.

Although the volume might seem substantial, emissions in the rest of the world would be about 9 billion tons by 2043, meaning that the emissions from Africa are quite modest for a continent that would then be home to almost a quarter of humanity (Chart 19). However, Africa’s emissions will increase to the extent that in the Combined Agenda 2063 scenario, Africa is a larger emitter than the EU27 countries in 2030, and overtakes the USA in 2039, India in 2046 and China in 2056.

On the Combined Agenda 2063 trajectory, Africa’s contribution to global carbon emissions will increase threefold: from 4% of global emissions in 2019 to more than 12% in 2043 and more than 18% by 2063. As expected, the scenario with the highest growth result, Free Trade, is forecast to also be the largest contributor to additional carbon emissions in Africa.

Were it not for the reduction in Africa’s total population as it progresses more swiftly through its demographic transition, the increase in annual carbon emissions would be larger.

Most African countries have a unique opportunity to leapfrog the fossil-fuelled development model towards renewables. Africa’s development trajectory will be severely affected by climate change and, as a minimum, the continent should commit to achieving net zero by 2063, meaning that it will need to work hard to not emit more carbon than is removed from the atmosphere by, for example, restoring forests, adopting the least carbon intensive growth path and transitioning to renewable for its energy requirements. 

There are prospects for rapid improvements. For example, a 2019 report by the International Energy Agency (IEA) calculates that Africa could, using renewables, meet the 2040 energy demands of an economy four times larger than today’s with only 50% more energy than today. [21International Energy Agency, November 2019, Africa Energy Outlook 2019, World Energy Outlook Special Report] In its World Energy Outlook 2021 report, the IEA estimates that the amount of energy needed per unit of gross domestic product improves by 2.8% a year. [22International Energy Agency, World Energy Outlook October 2021]

However, when it comes to minerals, Africa is also the most unexplored continent, with massive stocks of potential coal, gas and oil – upon which a number of countries are heavily dependent, including South Africa, Angola, Equatorial Guinea, Gabon, Nigeria, Algeria and Libya.

Much more is possible, demonstrated by Morocco’s model. [23Staff writer, 10 October 2020, IEA reaffirms Morocco’s renewable energy leadership, North Africa Post] In 2009, Morocco announced a target to produce 42% of its electricity needs from renewable sources by 2030, increased that target to 52% in 2015 and seems on track to achieve 65% thanks to steady investment and consistent policies, including an investment-friendly regulatory framework allowing tendering and auctions for large-scale solar and wind projects, which encourage private investments in the sector.

At the April 2021 US Leaders Summit on Climate, the IMF called for a ‘robust price on carbon’ among large emitters, such as the G20 group of countries, noting that ‘the average global price is currently US$2 a ton, and needs to rise to US$75 a ton by 2030 to curb emissions in line with the goals of the Paris Agreement’. [24Kristalina Georgieva (International Monetary Fund), 22 April 2021, Leaders Summit on Climate, Session 2: Investing in Climate Solutions]

To this end, we added a scenario in which Africa institutes a differentiated carbon tax by 2033. [25US$25 per ton for low-income countries, US$50 per ton for lower middle-income countries, US$75 per ton for upper middle-income countries and US$100 per ton for high-income countries.] The taxes are maintained at that level to 2043. We realise that a carbon tax is something of a blunt instrument and has fallen out of favour with some, such as the EU, who prefer a carbon pricing system, which reduces the amount of regulation required for energy efficiency.

However, as shown in Chart 20, the scenario serves an illustrative purpose:

• The impact is that Africa releases 38 million tons (13%) less carbon in 2043 than in the Combined Agenda 2063 scenario.
• The economic impact would be that the total African economy is US$27 billion smaller in 2043 than in the Combined Agenda 2063 scenario. The most significant individual reductions by 2043 would be seen in Nigeria (–US$11.2 billion), Algeria (–US$8.3 billion), Egypt (–US$2.8 billion), Angola (–US$2.2 billion) and South Africa (–US$1.3 billion).
• GDP per capita will be US$18 less in 2043. The countries most affected are inevitably Africa’s top oil producers.

Beyond the threat to livelihoods, Africa will have to get its carbon house in order and the contribution of the carbon tax modelled in this scenario is clearly insufficient, reflecting a reduction of only about one percentage point. The EU’s carbon border adjustment tax will also shortly slap levies on imports from countries without equivalent carbon price mechanisms, meaning that African exports to the EU will become more expensive without additional measures.

The extent of the challenge was underlined when, in May 2021, the IEA released a roadmap that sets out, in stark terms, the rapid clean-energy revolution that is needed and would have to involve unprecedented global cooperation.[26International Energy Agency, May 2021, Net zero by 2050: A roadmap for the global energy sector] The forecasts imply no new oil and gas fields; a collapse in demand for oil; the abandonment of many liquefied natural gas projects; and refineries being closed. In addition, the roadmap calls for solar and wind power capacity additions of 1 020 GW per year by 2030 – four times the 2020 amount; electrical vehicle sales to account for 60% of all sales (compared to 4.6% currently); massive increases in annual battery production; the roll-out of carbon capture technology; and significant ramping up of nuclear energy capacity. Clearly our modelling of a carbon tax is insufficient.

Governance and unlocking Africa’s human capital

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Africa needs strong, developmentally minded governments and associated leadership that regulate, empower and support small and medium-sized businesses, which is the primary wealth and employment creator in the 21st century. [27The private sector in Africa is showing steady growth and doing so from the smallest informal trader to large multinationals. A 2017 study by McKinsey reveals that some 400 companies in Africa earn revenues of US$1 billion or more and that nearly 700 companies have revenues greater than US$500 million. Most have grown faster than their peers in the rest of the world in local currency terms, and most are more profitable than their global peers. Just over half are owned by Africa-based private shareholders, 27% are foreign-based multinationals and 17% are state-owned enterprises. K Jayaram, O Kassiri and IY Sun, June 2017, The closest look yet at Chinese economic engagement in Africa, McKinsey & Company] In the field of poverty alleviation, governments need to offer an enabling hand that shapes the market in a pro-poor manner whilst itself alleviating extreme poverty through grants, work schemes, the provision of housing and other measures to those whom cannot adequately provide for themselves. This means the precise allocation of poverty alleviation resources such as done in China, seeking to help families and communities in ways that address their direct needs and enable them to eventually wean themselves out of poverty. Experience from around the world highlights the need for growth policy to place particular emphasis on institutions and policies that promote strategic collaboration between the government and the private sector but on the clear understanding that the market will not resolve poverty. That requires a capable government committed to harnessing and regulating all resources to that end and that monitors and helps in direct proportion to the need. [28United Nations Economic Commission for Africa, 2013, Making the most of Africa’s commodities: Industrializing for growth, jobs and economic transformation, Addis Ababa: UNECA.] In many senses, development is about eventual independence from the helping hand of others.

The continent needs governments that consistently invest in knowledge creation. The Norwegian scholar and economic philosopher Erik Reinert describes what lies at the heart of development: ‘The global economy,’ he writes, ‘can in many ways be seen as a pyramid scheme of sorts – a hierarchy of knowledge – where those who continually invest in innovation remain at the apex of welfare.’ [29ES Reinert, 2007, How Rich Countries Got Rich and Why Poor Countries Stay Poor, London: Constable, p. 148.] Reinert points to the importance of ‘going up the productivity and technology curve’, generally a function of investments in research, development and expanding the manufacturing sector more than others.

In a different context, the McKinsey Global Institute makes the same argument in concluding that ‘all global value chains are becoming more knowledge intensive’. [30S Lund ,J Manyika, J Woetzel, J Bughin, M Krishnan, J Seong and M Muir, 2019, Globalization in transition: The future of trade and value chains, New York: McKinsey Global Institute, p. 1.] The associated response could take many forms, but only deliberate efforts to unlock the promise of digitisation and the Fourth Industrial Revolution will achieve this in the 21st century.

In the aftermath of the great global recession of 2008/09, globalisation briefly deepened until the COVID-19 pandemic and then competition between the US and China changed things even before the disruptive effect of Russia’s invasion of Ukraine on global food markets. Today growth and trade within regional trading blocs (as opposed to between these blocs) has become particularly important. [31McKinsey Global Institute, 2016, Digital globalization: The new era of global flows, New York: McKinsey & Company, p. 3.] Global value chains are shortened as production moves closer to consumers. This is partly the result of efforts to improve the speed of getting goods to market, but is also a reaction to global tensions caused by a growing sense of nationalism, like the very visible efforts by Europe and the USA to constrain technology transfer and competition from China, as well as the reactions to the war in Ukraine. Previously the costs of labour had been a deciding factor in the location of manufacturing, but in the last two to three decades non-labour costs – including the costs of managing complex global value chains – have increased in importance.

Regional value chains and localised production that is closer to the end-market have become more attractive in advanced and emerging economies alike, with some even talking about doing manufacturing on demand based on technologies such as 3D printing. [32K de Backer and D Flaig, 2017, The future of global value chains: Business as usual or “a new normal"?, Organisation for Economic Co-operation and Development] This is the emergence of a decentralised, cottage-industry model of industrialisation, referred to in the theme on manufacturing.

Africa needs to integrate itself regionally and into global supply chains to facilitate knowledge transfer. To that end Africans need to actively encourage foreign companies to invest and locate on the continent, as well as by attracting skilled foreigners. Part of that process is to manage its debt levels, to eradicate financial leakages, mobilise domestic resources, efficiently allocate funds and curb capital flight. [33R Arezki and A Erce, 8 December 2020, How to reignite Africa’s growth and avoid the need for future debt jubilee, Brookings] Some refer to instituting ‘radical transparency’, such as to ensure that all debt – not only sovereign debt, but also debt directly or indirectly guaranteed by African governments such as that held by special financial vehicles – is recorded on the World Bank’s Debtor Reporting System.

Technological knowledge transfer is crucial in addition to steadily expanding local content requirements to make sure that these companies are embedded in local value chains. Over time, local value chains will allow African companies to become part of international value chains. Whatever the exact point, Africa needs to subscribe to an approach that enhances the mantra of ‘designed in Africa, grown in Africa, made in Africa’.

In this regard, there is much that Africa can learn from China, which has perfected the art of setting up a subtler ambush by requiring foreign companies to partner and transfer technology to local partners. In the process China, not the West, has emerged as the global manufacturing hub. It achieved these goals by making technology transfer and skills requirements of law, including them in every agreement and then negotiating hard. China has set its intentions clearly to rival the USA as technology leader in a number of key areas, including artificial intelligence, and has been so successful that the West now scrambles to constrain its growth.

Instead, many African countries (e.g. Kenya, Nigeria and Zambia) specialise in so-called ‘foreign ambush’. Their primary orientation is not to attract and nurture foreign business, but to entice and trap them. Once a foreign company has been attracted by a liberal legal framework and fiscal incentives to invest, the rules are changed in an effort to extract greater profits and possibly even to benefit particular nationals or families. Nothing scares private investment more than uncertainty, and the threat of changes to their legal or tax status is often a substantial disincentive. The result is that the companies that do invest eventually capitulate and leave, as many South African (and other) companies have done in these three countries. In another example, South Africa has made it particularly difficult for skilled foreign nationals to obtain work permits or for companies to invest, while adding one compliance burden on top of another.

Many of Africa’s post-independence efforts at industrialisation failed because of efforts to effectively create islands of technological sophistication and prestige projects in a sea of informal, low-technology economies. Without forward and backward linkages to the domestic economy, these projects were dependent on government subsidies and handouts in terms of access to foreign markets, for instance through the US African Growth and Opportunity Act. Some of the recent investments in heavy-duty infrastructure (as opposed to basic infrastructure) threaten to replicate these mistakes. When these agreements came to an end, the investments proved unsustainable and the company inevitably folded or left. It is for the same reason that highly capital-intensive projects such as gas and petroleum extraction projects in northern Mozambique, Angola, Nigeria, Equatorial Guinea and Gabon provide little spillover effect to the wider economy. All provide a stream of money to state (or more narrow) coffers and the fight for control of that money often determines who governs. But oil or gas income on its own does not develop a country and its importance is set to decline given the threat of climate change. Above all, Africa needs appropriate government policy, ethical leadership and oversight that unlocks the one thing we have in abundance, our human capital.

Eventually the transformation of Africa is less about grand schemes and ambitions (of which there have been many) and more about the mundane functions of improving food security through land reform and support of small-scale farming; ensuring a hassle free and facilitative investment environment; holding one another to account; and facilitating foreign investment in clear terms. It requires a technical and bureaucratic process, where governments have to meticulously go through every single impediment that deters or inhibits innovation, entrepreneurship and doing business. This is about governments that get behind success, offering support and helping to facilitate growth in a sector that is already showing potential, rather than merely shovelling money in that direction.

Long-term planning requires policy certainty and there are many challenges in this domain, as civil resistance campaigns against dictators and lifetime presidents mount. For investment, as opposed to war profiteering, policy predictability is a prerequisite.

Conclusion: Africa has untapped development potential

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On a structural level, many of Africa’s challenges come from its imposed state formation process, which started with imperialism and lasted through the colonial period. Decades later, the end of the Cold War released Africa into an international state-based system - when its constituent states had not yet been able to consolidate through the sequential processes of security consolidation, government capacity enhancement and eventually broader inclusion and subsequent legitimacy through which the Westphalian state was established in Europe and from which we often draw our examples. [34The Peace of Westphalia signed in 1648 concluded the 30-year ‘wars of religion’ and is generally accepted as the start of the modern state system.] The result has been development, stability and respect for individual rights.

By contrast, much of Africa and its amalgamation of unconsolidated ‘states in name’ have been poorly served by elites who often appear to place their family, tribe or ethnic group ahead of their country’s development rather than a commitment to advance equal development for all its citizens. In many African states, governing often consists of a continuous process of bargaining and patronage amongst numerous traditional, ethnic, family and other groupings to retain power. All that is changing, but slowly.

Eventually, Western donors, China or India, will not develop Africa; only Africans can, but cannot do so in isolation. Although Africans should understand where they come from, leaders must accept responsibility for shaping the future, manage debt levels and carefully allocate resources to maximise development progress.

Rapid growth at low levels of development is messy and difficult. Each African country needs to develop organic practices tailored to that country's domestic conditions. ‘Countries become successful,’ argues Lant Pritchett, ‘by means of an ugly, messy, contested hard slog that takes decades. And then, after they become successful, they create myths about how wonderful it was and the reasons why they did it, when the reality was just that it was a hard slog.’ [35Prof. Lant Pritchett in conversation with Ann Bernstein, Centre for Development and Enterprise, June 2021]

This website presents a host of policy recommendations that seek to explain and explore the development of Africa. The general result that emerges from the analysis is to recognise the interrelationships between various sectors. In many senses, governments need to fix the basics. For example, they need to invest in basic infrastructure such as electricity, sanitation, water and roads, literacy and primary education, and empowering and helping small-scale farmers and businesses improve productivity to ensure sufficient nutrition and food security.

Leapfrogging should be seen in this context to allow Africa to benefit from new technologies so that things can progress more rapidly and cheaply, such as by using digital identification systems and electronic payments systems to improve the capacity of governments to deliver more effective programmes or provide electricity to their citizens through decentralised mini-grids using renewables. Access to electricity and the global village (through access to the Internet) offers enormous potential to embark on a rapid digitisation process and its potential as a critical enabler. [36United Nations Economic Commission for Africa, 2019, Fiscal policy for financing sustainable development in Africa, Addis Ababa: UNECA, p. xiii.] Large infrastructure projects are essential. Still, the trade-off is to ensure that there are, first, enough paved roads before investing in hugely expensive railway lines unless these are required for heavy-duty exports such as iron ore. And it won’t happen unless a capable government and its people want it to happen.

Current forecasts indicate that the rise of India could lead to a global resources boom starting within the next decade, even as the transition to renewables means that a new scramble for Africa’s minerals, such as nickel, is imminent. Much as African economies need to diversify, it is unlikely that this will be possible by then. Nor is it a given that Africa will be the region to benefit most from this boom, for, according to the Fraser Institute, much of Africa ranks near the bottom in their annual survey of mining and exploration attractiveness. [37Investment decisions are not based only on mineral potential but also on policy certainty and confidence in a policy regime that will remain stable. Policy factors account for approximately 40% of investment decisions. Regionally only Latin America and the Caribbean fares worse than Africa. See; A Stedman KP Green, 2018, Annual Survey of Mining Companies: 2017, Fraser Institute]

Resource extraction can provide an opportunity to invest in the efforts required to transform Africa’s economies and education systems for greater productivity. However, this is only possible if Africa uses that income and opportunity as a foundation and opportunity for structural economic transformation – going up the productivity value chain using renewables to power that pathway. Africa must embark on a direct path to a distributed, renewables-based energy solution that provides sufficient base load to drive its burgeoning manufacturing industry and unlock productivity from its services sector.

Africa has a large and growing working-age population. Its increasing labour force will, by 2037, be larger, as a proportion of its population, than that of the EU27 and more significant by the middle of the century than North America. This growing working-age population has the potential to accelerate economic growth, provided the continent can improve on the associated skills base and create the demand to translate that skills base into a knowledge economy. The reverse applies in Europe, where the contribution from labour to economic growth is declining.

However, the potential contribution from Africa’s growing labour pool is insufficient to guarantee productive economic growth without adequate investment in appropriate education for the Fourth Industrial Revolution, sufficient nutrition and access to healthcare, and industrial policies that incentivise and absorb graduates. Africa trails significantly in all three areas compared to global averages. Since investments in human capital provide the most enduring contribution to sustainable economic growth over long time horizons, the continent needs to invest in the associated enablers.

Even with the best will and good fortune, it is unlikely that all African countries would be able to achieve similar success in advancing across all dimensions. In addition, the type of reforms required to move from low levels of development is quite different from that required at the middle-income level. Eventually, only individual country studies can indicate the potential growth that is possible.

Apart from everything else, African countries need modern, capable leadership that can connect with the aspirations of its youthful population. Leaders should be prepared to move on after a set term, look to the future rather than fixate on yesterday, and rely on evidence-based policymaking, not ideology. Africa does not need excellent governance, superb education, or top hospitals; what transforms a country is typically governance that is ‘good enough’, strong local low-tech health programmes, and decent education and jobs for women. That is the essence of the call by Nelson Mandela that we should not ‘seek to place blame for our condition elsewhere or to look to others to take responsibility for our development’, but to become the masters of our own fate. [38NR Mandela, 23 July 2002, Address by Nelson Mandela at gala banquet celebrating Africa’s 100 best books of the 20th century]

These are the challenges and opportunities that confront Africa today, as it aims to close the gap with the rest of the world and achieve its Combined Agenda 2063 ambitions.