This November will once again see Morocco convene the leading players of Africa’s economic future, with the Marrakech-hosted African Investment Forum (AIF) 2023 Market Days Event set to build on mid-October’s World Bank-International Monetary Fund (IMF) summit. Guided by the theme of “Unlocking Africa’s Value Chains,” heads of state, policymakers and private sector actors will aim to secure a series of key investments to drive the continent’s sustainable development.
As African Development Bank chief Akinwumi Adesina highlighted ahead of the recent World Bank-IMF meetings, the time has come for Africa to abandon its poverty-inducing model of raw materials exporting by capitalising on its vast natural wealth and human potential to develop homegrown manufacturing, renewable energy and digital sectors. In this effort, Africa’s mining and fintech sectors are set to play vital complementary roles, providing the foundations to help Africa countries assume their rightful place at the global economic table.
Africa’s emerging economic revolution comes against a challenging backdrop, with a recent UN report warning that many of its Sustainable Development Goal (SDGs) remain well off the mark. Beyond this material layer, the continent must also shed Western perceptions that have long kept it as a junior partner and passive recipient of international economic cooperation. Yet encouraging signs of change are surfacing, notably captured by the African Union’s long-overdue G20 accession at the group’s September summit and the UN General Assembly’s unprecedented calls for its enhanced international governance role.
Africa has invaluable assets that the global economy will need to manage future challenges, starting with its young, ambitious and rapidly-growing population. Adesina has pointed to the fact that the continent’s population will hit a whopping 1.72 billion by 2030, surpassing both China and India, with nearly half a billion people between the ages of 15 and 35 set to help fill future gaps in an aging global labour market.
In terms of natural wealth, Africa accounts for 60% of the world’s best solar resources but only 1% of its installed solar panel capacity, creating massive opportunities to develop local renewable energy production – the building blocks for which lie under its surface. Indeed, the continent’s vast mineral reserves of copper, cobalt, lithium and nickel are key inputs for solar panels, wind turbines, EV batteries and critical green transition technologies.
With the International Energy Agency projecting soaring demand for these critical minerals in the coming decades, the Democratic Republic of Congo (DRC) – the world’s top cobalt and Africa’s leading copper producer – is taking action to capitalise on these resources. The DRC Government’s vision includes an ambitious partnership with Zambia – another mining powerhouse – to manufacture EV batteries in newly-created Special Economic Zones at significantly lower cost and carbon emissions due to their proximity to mines.
At the Kinshasa-hosted DRC-Africa Battery Metals Forum in September, senior government official Saturnin Wangwamba underscored how this initiative will fuel “inclusive, equitable and sustainable industrialisation,” allowing local communities to benefit from their natural resources. What’s more, Dorothée Masele, community relations manager for Tenke Fungurume Mine (TFM) – home to one of the world’s highest-grade and expansive copper-cobalt reserves – emphasised the importance of embedding ESG into the mining sector to avoid unintended social and environmental impacts.
As majority shareholder of TFM, Chinese mining firm CMOC is among the DRC and wider region’s key partners for developing world-leading EV battery manufacturing capacities while promoting ESG-driven mining. CMOC openly backs the DRC Government’s plans for localised green industrial growth, with Vice President Zhou Jun recently hailing “a significant and promising development in which we will play an important role.”
To ensure its operations benefit local communities, CMOC has joined the Fair Cobalt Alliance, through which it contributes to the implementation of labour rights, safety and environmental standards in and professionalization of the artisanal mining sector. Moreover, CMOC’s extensive investment in community development initiatives helps thousands of local residents access job and training opportunities, thus reducing economic dependence on the hazardous conditions of artisanal mining while promoting gender inclusion and women’s contribution to economic growth.
If this green industrialisation will provide the foundation for Africa’s future economy, the continent will also need to continue expanding its digital sectors to keep pace with the soaring local labour demand. Africa’s booming fintech sector is primed to help a significant part of the its workforce leapfrog directly from agricultural to service sectors as the continent’s young, innovative startup founders create jobs while facilitating financial inclusion for communities and small companies in isolated rural areas
While Egypt and South Africa are giving it a good run for its money, Nigeria remains the undisputed heavyweight of Africa’s fintech sector, with local startups securing $2.7 billion over the last two years as the global investment community increasingly views Africa as the future of fintech – particularly as 70% of global digital payments now occur in Africa.
US-based startup accelerator firm Y Combinator has been a critical partner of Nigeria’s fintech market, investing early in and supporting future unicorns such as Flutterwave and Paystack. Y Combinator has been widely recognised as one of the first accelerators to seek out promising African companies and help turn the innovative visions and drive of local entrepreneurs into thriving companies.
Adesoji Solanke, fintech director at Renaissance Capital, has noted how firms like Y Combinator not only provide fledgling startups crucial US dollar capital but also an immediate spike in valuation, both of which attract future investors. More broadly, Y Combinator’s focus on selecting African founders with particularly strong understanding of local contexts has helped ensure that its investments contribute to the development of innovative solutions to tackle socioeconomic challenges and sustainably fuel the local industry’s growth.
Yet as skills gaps and a fragmented regulatory environment continue the attractiveness of Africa’s fintech and industrial sectors, the continent’s governments will need to join forces to harmonise trade and finance regulations while ramping up targeted training programmes, ensuring “investments can land…like a plane on a smooth landing strip,” in Adesina’s words.
With world leaders increasingly recognising Africa’s economic promise and importance, the recent Morocco-hosted development conferences have underscored the need for further public-private sector collaboration to open the financial floodgates, which will help the continent unlock its economic potential while contributing to the world’s sustainable development.