The resource-rich continent of Africa is dubbed the largest mineral industry in the world as it accounts for most state’s foreign exchange earnings. Al-Jazeera’s mapping of natural resources in Africa showed that the continent is known for producing about twenty-five unique mineral resources categorised under metals, industrial minerals, mineral fuels, and oil.
Despite ranking first or second in the number of world reserves for bauxite, cobalt, diamonds, phosphate rocks, platinum-group metals (PGM), vermiculite, and zirconium, this mineral wealth hardly dents the poverty levels and developmental challenges in African states.
Thirty percent of African countries are rich in oil and gas, with the entire continent still having considerable stake in world production of metals, industrial minerals, and mineral fuel resources. However, these resources have a negative effect on unemployment rate, poverty level, and infrastructure development in these nations. Not only that, the overdependence of African nations on mineral wealth has further promoted mismanagement of state resources, corruption in state or federal-controlled resource areas, and weakened governmental institutions.
The overburdened reliance on mineral wealth export like crude oil accounted for the negative balance of payment recorded by African nations at the peak of the COVID-19 pandemic, but in the midst of the fluctuations in the mineral wealth industry, African tech companies raised over $1 billion in 2020. Though meagre when compared to contributions from mineral resources, a Google-IFC report projects that Africa’s internet economy has the potential to reach 5.2 percent of the continent’s GDP by 2025, contributing nearly $180 billion to the economy.
For African millennials and Gen-Z, technology and innovation are their gold mine and mineral wealth, based on the number of tech hubs established in Africa to offer support and facilities for tech entrepreneurs and startups. Forbes reported that there were 643 tech hubs in Africa as of October 2019. More practical reasons for African economies to transition from reliance on fluctuating mineral wealth to technology and innovation are highlighted below.
Transform the Future of Jobs
Traditional jobs are becoming extinct across the world, and Africa is no different. Currently, there are nearly 700,000 professional developers across Africa with more than fifty percent concentrated in five top African markets — Egypt, Kenya, Morocco, Nigeria, and South Africa. According to the Google-IFC report, internet penetration in Africa is at forty percent, and making policies that will increase it further will improve the continent’s GDP per capita because it will create millions of high, medium, and low skilled digital jobs that support remote working.
The job opportunities in mining are shrinking on a yearly basis and tech has the potential to provide new jobs within African countries where unemployment is skyrocketing at an alarming rate and people are getting poorer.
Redistribution of National Wealth
Mineral wealth has become concentrated within a certain echelon in the African social setting, as most of the richest people in Africa have investments or stakes in the mineral industry. However, the number of tech startups that have sprung up in Africa are introducing avenues for significant economic growth that will help create more jobs, reduce poverty, solve basic social problems, and contribute to overcoming Africa’s future development challenges while creating wealthy millennials from unicorn status tech companies.
Creating Digital Solutions
Innovation developed by homegrown tech startups is solving basic African problems like agricultural financing, savings, investment, access to loans, healthcare issues, and others. Diversifying to tech and innovations could help in solving the inherent generational problems of labour, corruption, and illegal outflows in the mineral industry too.
Plugging Loopholes in Illegal Outflows
Reports revealed that Africa loses over $60 billion a year in illegal outflows and price manipulation in the extraction of minerals, with most of the proceeds going offshore. The success recorded in fintech, health tech, and cleantech could be replicated in the mineral industry, using homegrown softwares to manage and track minerals exploration while streamlining extraction processes in a way that fizzles out illegal labours at mining sites and monitors revenue from mineral resources in state coffers.
African governments are challenged to make technology and innovation soar. It only requires that they make legislations and policies that accommodate tech innovators, startups, and investors as the untapped opportunities of Africa’s digital technology and innovation growth is getting global attention, seeing as Twitter and Amazon just made commitments to have branches in Africa and SpaceX’s Starlink is making its way into the continent soon.
Not only that, African countries looking to revamp their economies after the pandemic dented should focus on diversification to the technology industry.
Olakunle explores the interlink of public policy, development, education, and being Nigerian. He tweets @Olakunile.