Africa

THE
MARKET OF
THE
FUTURE?
Table of Contents
History

Current Context

Conditions of Current Development

Actors: Motivations and Means

Looking to the Future

History
Cradle of Civilization
• Africa is the birthplace of hominids, archaic humans, and Homo Sapiens

• History of great civilizations

Ancient Egypt Mali Empire Kingdom of

Aksum
 • In the 15th century, Portugal became the first European
1500s-1800s: nation to take part in African slave trading. This led to much
of Europe joining the slave trade, purchasing kidnapped
European Africans and using them for free labor.

Interference • Changed Africa’s role in global trade by beginning long-

term trend of Africa being exporter of raw materials and
resources and importer of European manufactured
goods
1800s - Post Slave Trade
• 1807 – British government made it illegal for British subjects to engage
in the slave trade, other European nations followed suit

• Africa transitioned from a source of labor to a source of raw materials

for industrializing European powers.

• Europe would buy luxury goods from Africa or resources to increase

their efficiency, without importing manufactured goods in
Late 1800s – 2000s: Scramble for Africa
• 1885 Berlin Conference: European nations portioned Africa for colonialism, without
consent of the African countries

• Goal: provide maximum economic benefit to the colonizing powers at the lowest possible
price
• Focused on areas of Africa that had been developing significant trade and economies of their
own through European trade, shutting down their economies for the benefit of Europe

• Forced Africa to produce only for the export market

• In Tanganyika, colonial authorities shifted labor from production of local dietary staples
like millet and sorghum to labor-intensive cotton and minor crops of peanuts and sesame
• Led to inadequacy of food reserves and chronic malnutrition and famine, that still affects Africa
today
1950s-2000s: Decolonization
• After the growth of nationalistic
movements, African nations began
gaining independence in the late 1950s.

• By the 2000s, all African countries had

gained independence.

• Colonialism integrated Africa into the

world economic system but made them
unequal partners in international trade.
2000s - Today
• Instability
• Armed Conflicts & Civil Wars
• Coups and Government Changes
• Election Troubles
• Bad Leadership and Corruption

• Created mass instability in the region,

preventing countries from working
together and slowing economic and
societal progress.

• Led to Economic Underdevelopment --

2010-2019, GDP growth fell 35%
Africa Today
• $2.5 trillion economy, 1.3 billion people, 55 countries

• No "One Africa“  4 Categories of Countries

Consistent Growers Recent Growers

Recent Slowdowns Slow Growers

• Half of Africa lives in Consistent or Recent Growers

• These countries only represent 25% of Africa’s GDP

• Top 6 GDP nations are categorized are slow growers or

recent slowdowns
Map of Africa by 2020 nominal
GDP

(billions)
Characteristics Making
the
Market of the Future
Current Conditions

1 Population Growth

2 Urbanization

3 Shift to Service Ecnomy

4
Resource Control

5 Digital Revolution &

Leapfrogging
Population Growth  Creating a Consumer
Market
 High Fertility Rates

• Africa: 4.5 children per women • Worldwide: 2.3 children per

 Increasing Life Expectancy over
Time

• Improved medical services• Improving Sanitation • Increasing Vaccine Accessibility

Population Growth
Africa’s 1.2 billion population is
expected to double by 2050,
meaning 25% of the world’s
population will be from Africa.

By 2050, 40% of all children

under 5 will be in Africa
Growing Middle Class
• Offers a vast consumer base who will spend on products and services
across various industries

• Rising middle class characterized by increased disposable income and

changing consumption patterns

• 250 million Africans are expected to join the consuming class by 2030,
unlocking $3 trillion in consumer spending
Urbanization  Creating a Skilled
Workforce
Increasing Urbanization
• In 2019, 57% of Africa lives in rural areas

• By 2040, Africa will be majority urban, with

more than 5oo million Africans migrating to
cities
• Will be home to the largest total number of urban
dwellers in the world

• Africa will be home to 12 cities with more than

ten million people and 19 cities between 5 and
10 million people
Urbanization driving Economic
Growth
Urbanization drives Development
Urbanization’s effect on rural areas
Shift from Agriculture to Services
• In the past 20 years, employment in services has increased from 30%
to 39% in Africa.

• Services create opportunities for African countries to boost economic

output and job creation

• Services increase productivity, boosting GDP and increasing

employment
Offering a Global
Solution
Africa will add 796 million people to
the global workforce, as the largest
and youngest working population by
2050

Could offer a solution to the growing

global talent shortage via services
outsourcing

Makes Africa an attractive potential

labor force.
Resource Wealth
Resource Wealth

Mineral Resources
• Gold, diamonds, copper, cobalt and platinum

Energy Resources
• Oil, natural gas, coal, minerals essential to clean
energy transition
Mineral Resources
• 40% of World’s Gold

• 30% of essential minerals: iron, copper, aluminum, platinum,

chromium, lithium, and more

• Rich mineral deposits can be harnessed for economic growth, export

revenues, and employment opportunities in many African countries

• Historically, much of Africa’s internal conflict has been caused by

resource disputes, governments must work together to avoid this
infighting in the future.
Resources Critical to Clean Energy
• Holds at least 1/5th of the world’s reserves in a dozen metals critical for
the energy transition

• About 20% of the resources needed for electric cars

• As the world moves towards clean energy, Africa will become

increasingly relevant as a supply of raw materials
Harnessing Resources
• Requires investment into sustainable mining practices, infrastructure
development, and processing capabilities to maximize the economic
and social benefit for African countries.

• At risk of perpetuating the trend of Africa as a global exporter of raw

resources and continuing the technological gap.
Digital Revolution
Digital Revolution
• Availability and use of digital technologies are strongly linked to economic
growth, innovation, job creation, and inclusion at national and regional levels.

• Digital revolution is being driven by increase in internet usage in Africa

Percentage of Africans with Internet Usage

2016 2021
Western and Central Africa 23% 47%

Eastern and Southern 16% 27%

Africa

• By 2030, ¾ of Africa is expected to be internet users

Digital Revolution Effects

E F F E C T S O F M O B I L I Z AT I O N

• Mobile technologies have already

generated 1.7 million jobs and $144
billion to Africa’s economy,
representing 8.5% of the GDP.

• Access to 3G internet coverage leads

to a 14% increase in consumption and
a 10% decrease in poverty
Leapfrogging
Definition: bypassing traditional stages of
development to either jump directly to the latest
technologies or explore an alternative path of
technological development.
Leapfrogging to Cell Phones
Leapfrogging with Digital Innovation
• Africa’s digital revolution is driving innovation and leapfrogging in many
sectors like financial-tech, e-commerce, and health-tech.

• Mobile payment platforms are increasing availability to financial services in

Africa. Kenya’s M-Pesa and Ghana’s MTN Mobile Money allow Africans to make
digital payments and transfer money through their phones.

• Through these digital innovations, Africans are increasingly gaining access to

retail and trade, healthcare services, and improving productivity.
Leapfrogging to Clean Energy

When powering
unpowered areas, Africa
can leapfrog to
decentralized solar
energy. This will remove
the need to build complex
power grids for each
village and will prevent
Africa from having to
endure a clean energy
shift like other Continents.
• Source: World Bank World Development Indicators
Implications

Emergence of a Massive Consumer Market

Emergence of a large and more skilled labor

force

Availability of resources and processing

power

Digital innovations improving life for all

Africans
The Actors building the Market
African Governments
African Governments
• Economic Growth: African governments seek to stimulate economic
growth, create jobs, and improve living standards for their citizens.

• Infrastructure Development: Governments aim to attract

investment in infrastructure projects to support market growth and
facilitate trade and commerce.

• Political Stability: Stability and security are essential for market

development and preventing the pitfalls of the last 20 years.
Connecting Africa
• Recent instability prevented
Africa from connecting through
trade.

• Africa currently trades much

more with other continents than
with themselves. Only 10% of
imports and 17% of exports are
interregional.
African Union (AU)
• Founded in 2002 in Durban, South Africa to replace the Organization of
African Unity (OAU)

• Objective: to promote political and economic integration, advance

peace and security, and defend the sovereignty and territorial integrity
of member states while accelerating Africa’s development and
strengthening its voice on the global stage.
Agenda 2063
• Strategic framework for socio-economic transformation of
Africa over the next five decades, until 2063

• Key Components:
Improvements in Living Standards

Transformed, Inclusive and Sustainable Economies

Integrated Africa

Empowered Women, Youth and Children

Well-governed, peaceful and cultural centric Africa in a Global

Context
African Continental Free Trade Area
Agreement
Adopted in March 2018 and began in 2021, AtFCTA is the world’s largest
free trade area, combining 55 countries and 8 regions into a single
market.

• Market Integration: establishes a single continental market for goods

and services, to facilitate intra-African trade and investment by
eliminating trade barriers.

• Dispute Settlement Mechanism: establishes a mechanism to resolve

trade disputes among member states in a peaceful way.

Will make Africa one of the largest free trading areas in the world.
China
China’s Interest in Africa
• Access to Resources: China is the largest consumer of raw materials
in the world. Investing in Africa provides them access to Africa’s
resources.

• Emerging Consumer Market: Africa could potentially provide Chinese

companies with a massive consumer market.

• Strategic Partnership: China seeks to enhance their global

governance and dominance in global trade
China – Africa
Relations
China has been Africa’s largest trading
partner since 2009.

China is currently involved in

infrastructure projects in 35 African
countries.

In return for providing infrastructure,

Africa provides China with essential
resources.
One Belt and One Road
Initiative
Increases Chinese investment into African
infrastructure, boosting Africa’s development.

Africa exports could increase by $192 million if

OBOR projects are used profitably.
Multinational Corporations
Multinational Corporations (MNCs)
• Labor Force: Africa’s demographics present an opportunity for companies to
access a large pool of increasingly skilled labor, potentially improving
productivity, innovation, and competitiveness in global markets.

• Consumer Market: Africa’s population growth, rising middle class, and

growing purchasing power presents an opportunity for MNCs to expand their
market share and generate revenue growth

• Government Aid: Many African governments offer incentives, subsidies, and

tax breaks to attract foreign investment. This government aid allows MNCs to
reduce operating costs, access local markets, and contribute to development
initiatives.
 Means: Public-Private Partnerships
(PPPs)
• African Development Bank Group (AfDB) initiated the PPP strategic framework in 2022, scaling
up financing for economic and social infrastructure with private sector participation in Africa.

• 3 Pillars
• Upstream Support – Strengthening PPP Environment

• Midstream Support – Project Preparation and Transaction Advisory

• Downstream Support – Financing of PPP Projects

• Example: Kigali Bulk Water Project: received funding from African Development Bank, the
World Bank.
• Under the PPP arrangement, Kigali Water Limited supplies bulk water to the Water and Sanitation
Corporation, who will sell it to local consumers
Looking to the future,
Looking to the future,

is Africa the Market of the Future ?