New oil, gas and mineral discoveries boost African economies growth — World Bank
Despite setbacks in the global economy, sub-Saharan Africa is expected to grow at 4.8% in this year, broadly unchanged from the 4.9% growth rate registered in 2011 and largely on track, according to the World Bank’s latest report.
In its new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects, the institution highlights that new discoveries of oil, gas, and other minerals in the continent will generate a wave of significant mineral wealth.
With minerals beginning to earn hundreds of millions of dollars in windfall revenues for countries across Africa, World Bank Vice-President for Africa, Makhtar Diop, pointed out the opportunity for “strengthening economic transparency and financial controls around the new discoveries.”
He added that to leverage the mineral wealth full potential it is necessary to develop policies that increase economic growth, create jobs, reduce poverty, as well as improve health and education.
The World Bank says the economic importance for Africa of its natural resources is likely to continue in the medium term in several established oil and mineral producers. This will be a consequence, says the report, of sizeable stock of resource wealth in Africa and the prospects of continued, high commodity prices.
African countries share in global reserves and annual production of some minerals is sizeable.
Strike-hit South Africa is, by far, the most important in the region. The country is the fourth largest producer of iron ore, holds the same rank for annual gold production, is number one in platinum output and holds fifth spot for steam coal.
In 2010, Guinea alone represented over 8% of total world bauxite production; Zambia and the Democratic Republic Congo have a combined share of 6.7% of the total world copper production; and Ghana and Mali together account for 5.8% of the total world gold production.
“Resource-rich African countries have to make the conscious choice to invest in better health, education, and jobs, and less poverty for their people,” says Shantayanan Devarajan, the World Bank’s Chief Economist for Africa, and lead author of Africa’s Pulse.
The report also notes that with rapid population growth Africa is urbanizing rapidly, with deep implications for social and economic opportunities.
Africa contains 54 countries and a total population of 1 billion. From them, 41% live in cities, with an additional 1% expected increase every two years.
By 2033, Africa – like the rest of the world – will be a majority urban continent, points the study.
The role of the continent in the so-called “Golden Age of Gas,” was highlighted Tuesday by researchers at Ernst & Young. In their report “Natural Gas in Africa: The frontiers of the Golden Age,” the analysts say natural gas development holds tremendous opportunity for Africa.
“[Natural gas] can be a primary driver of economic growth and broader social development, as well as a major spur for local employment growth and infrastructure development,” said Ernst & Young’s Oil & Gas leader for Africa, Elias Pungong.
While the risk rankings overall in Africa are quite high, for many countries the ‘risk trend” is improving, adds Pungong.
“Most importantly though, the opportunities for Africa in this sector are enormous and the challenges and risks can be addressed and mitigated,” he says.
The study certainly doesn’t sell the market short as it concludes that “Africa’s gas reserves will be more than just headline opportunities for the national oil companies (NOCs), the deep-pocketed oil and gas majors, their big international exploration and production (E&P) counterparts as well as well-known African oil and gas specialists.”
Read the full Ernst & Young report here.