The Wealth of African Nations


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This is a story of three Africas.

One is all too familiar – the declining fortunes of fragile states. Another is less well-known: the growing importance of mineral and energy resources in many African economies. The big story is that, from 1995-2005, many countries in Sub-Saharan Africa grew their total wealth faster than the world average– a major African success story.

The Changing Wealth of Nations presents comprehensive wealth accounts, including produced, natural and intangible wealth (an amalgam of human and institutional capital) for over 120 countries. Aggregate natural wealth in Africa, including agricultural land, forests, minerals and energy, is twice as large as produced wealth, while intangible wealth (human and institutional capital) dominates in Africa, as in most countries of the world. [Insert Figure 1 here]

Figure 1. Composition of total wealth, Sub-Saharan Africa 2005

Since natural wealth is important for Africa, how have the fourteen extractive economies where mineral and energy rents exceed 5% of Gross Domestic Product (GDP) in 2008 fared? Comparing gross domestic saving with a measure of saving adjusted to reflect dividend payments abroad and depletion of natural resources, we see that wealth creation has been sharply negative in these countries from 1990 to 2008. This represents an opportunity not taken. Rather than financing investments in infrastructure and human capital, the large resource endowments of these countries either did not flow to governments through resource taxes, or have been consumed rather than invested.

Figure 2. Saving for the future, Sub-Saharan Africa 1990-2008

Next, the good news. The total wealth of African countries increased on average by 34% from 1995 to 2005, the same as the world average. For 21 countries, the rate of wealth creation was higher than the world average. Furthermore, increases in total wealth have been associated with strong increases in the human skills and quality of institutions which constitute intangible capital.

In fragile states, such as Zimbabwe and Madagascar, total wealth actually declined. These countries represent some of the toughest challenges for the development community. But for a broad swath of Africa this analysis of the wealth of nations should energize us – to consolidate the gains to date and to continue the pace of institutional reform.

Source for all figures:
World Bank 2011. The Changing Wealth of Nations. Washington: The World Bank.



Kirk Hamilton

Lead Economist, World Bank

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July 16, 2012

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