IMF Report: Critical Minerals Could Boost Sub-Saharan Africa's GDP by 12% by 2050

Sub-Saharan Africa could see 12% GDP growth by 2050 from critical mineral revenues, but must focus on local processing, governance, and sustainable development to fully capitalize on this opportunity.

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Olalekan Adigun
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IMF Report: Critical Minerals Could Boost Sub-Saharan Africa's GDP by 12% by 2050

IMF Report: Critical Minerals Could Boost Sub-Saharan Africa's GDP by 12% by 2050

Sub-Saharan Africa could see its GDP increase by 12% or more by 2050 due to revenues from critical minerals like copper, nickel, cobalt, and lithium, according to a recent report from the International Monetary Fund (IMF). The region is estimated to hold 30% of global reserves of these minerals, which are in high demand for the global transition to clean energy.

The IMF projects that global revenues from the extraction of just four key minerals - copper, nickel, cobalt, and lithium - could total $16 trillion over the next 25 years, with sub-Saharan Africa poised to reap over 10% of these cumulative revenues. Nickel demand is expected to double, cobalt demand to triple, and lithium demand to rise tenfold between 2022 and 2050.

Why this matters: The potential windfall from critical minerals could provide a significant boost to economic growth and development in sub-Saharan Africa. However, the region will need to focus on developing local processing industries, improving governance, and managing resource revenues responsibly to fully capitalize on this opportunity.

The IMF stresses that sub-Saharan African countries should not only export raw materials but also process them locally to capture more value and create higher-skilled jobs. Developing local processing industries could significantly boost value addition and increase tax revenues, supporting poverty reduction and sustainable development in the region.

However, the IMF notes that the region currently focuses more on extraction than processing, and local processing options are often limited. To address this, the report recommends a regional strategy built on cross-border collaboration and integration to create a larger, more attractive market for investment in mineral processing industries.

The African Continental Free Trade Area can play a key role in reducing trade barriers and developing infrastructure to unite fragmented critical mineral markets. Coordinated efforts to create more favorable investment and business environments, as well as minimize environmental impacts, can help unlock new funding and investment opportunities in green finance.

The IMF report highlights that the outlook for sub-Saharan Africa is gradually improving, with growth projections reaching 4.0% in 2025. However, the region continues to face challenges such as financing shortages, high borrowing costs, and impending debt repayments. To address these issues, the report recommends improving public finances without undermining development, focusing monetary policy on ensuring price stability, and implementing structural reforms to diversify funding sources and economies.

The report also emphasizes the importance of investing in education, as sub-Saharan Africa's population is expected to double by 2050. Governments should act to safeguard and expand education budgets, while the international community should ensure that education remains a priority.

Key Takeaways

  • Sub-Saharan Africa could see 12%+ GDP growth by 2050 from critical mineral revenues.
  • Global revenues from 4 key minerals could total $16T over 25 years, with 10%+ for Africa.
  • Africa needs to develop local processing industries to capture more value and create jobs.
  • Improving governance, infrastructure, and investment climate can unlock green finance opportunities.
  • Investing in education is crucial as Africa's population is expected to double by 2050.