Key highlights
- Africa could draw on its immense potential in terms of natural capital, including fresh water, forests and extensive mineral deposits to attract investment.
- Africa also contributes substantially to the world’s annual production of six key minerals: 80% of platinum, 77% of cobalt, 51% of manganese, 46% of diamonds, 39% of chromium and 22% of gold.
- AfDB also warned that African governments have failed to harness this natural potential to mobilize resources.
The African Development Bank revealed that Africa can use its comparative advantages to mobilize its resources and finance sustainable development ambitions drawing on its immense potential in terms of natural capital, including fresh water, forests and extensive mineral deposits to attract investment and accelerate economic growth.
The AfDB disclosed this in a statement titled, “Natural capital, an option for African governments to finance Sustainable Development Goals” in preparation for its general meeting later this month.
They added 75% of African countries have access to the sea, which offers immense opportunities in the blue economy, with a global potential estimated at about $1.5 trillion.
Comparative Advantage
The African Development Bank said Africa must use all its comparative advantages to mobilize the resources it needs to finance its sustainable development ambitions, adding:
- “Since 2010, official development assistance has declined, falling to its lowest level of $34 billion in 2022, according to Organisation for Economic Co-operation and Development (OECD) estimates.
- “Access to international capital markets remains constrained and costly due to investors’ perceptions of high risk.
- “But the continent is not short of options. For example, it could draw on its immense potential in terms of natural capital, including fresh water, forests and extensive mineral deposits to attract investment and accelerate economic growth.
Mineral wealth
AfDB says it intends to demonstrate this capacity during its Annual Meetings of the African Development Bank Group, scheduled to take place from 22 to 26 May 2023 in Sharm El Sheikh, Egypt, adding that Africa can utilize its mineral wealth advantage, they said:
- “For example, around 30% of global mineral reserves are in Africa, including 60% of world cobalt reserves and 90% of platinum-group metals.
- “The continent contributes substantially to the world’s annual production of six key minerals: 80% of platinum, 77% of cobalt, 51% of manganese, 46% of diamonds, 39% of chromium and 22% of gold.
- “Africa also holds 7% of the world’s natural gas and oil reserves.
People
The AfDB also focused on human capital which Africa is also endowed with, adding that Africa has more than 60% of the world’s undeveloped arable land and is home to 13% of the world’s population, they added:
- “60% of its people are under 25 years of age, the youngest population in the world. About 75% of African countries have maritime access, offering significant opportunities in the blue economy which has a global potential, if sustainably managed, of an estimated $1.5 trillion.
They warned that despite internationally listed junior mining companies mobilising considerable capital by promoting the value of their exploration or extraction licenses for African deposits on markets, African governments fail to harness this natural potential to mobilize resources.
- “Further, hundreds of millions of people exploit natural capital in an ad hoc manner, for instance, in the charcoal industry, which relies on an economic model of deforestation.
- “However, some countries are effectively taking advantage of natural capital. Morocco, for example, has established huge solar and wind energy plants.
- “ In 2022, British renewable energy company Xlinks announced the construction of a 3800-kilometre submarine cable to allow the UK to take advantage of this energy.
- “ Egypt harnesses the Nile River and the Suez Canal in various ways. The country also has the Benban solar photovoltaic power plant, launched in 2018, which is contributing to increasing the renewable energy output to 42% of the total by 2035.
