A worker in an open mine in Botswana. Photo by Lucian Coman | Shutterstock
Sub-Saharan Africa’s natural resource wealth can be the engine for a new era of economic growth and investment. The region sits atop vast subsoil wealth—metals, minerals, oil, and gas—that remains relatively underdeveloped and could help generate vital tax revenues for cash-strapped and debt-laden governments. However, we have observed too often that countries have failed to realize this potential, with projects languishing undeveloped, poor deals struck, or mismanaged revenues and spending by government failing to build robust and diversified economies. Improving on this mixed record in Africa will depend on getting the right policies in place and actively avoiding the pitfalls of the resource curse.
Africa’s Resource Future, a 2023 book we co-edited, reports that resource extraction is a key part of the regional economy, accounting for around 30% of government revenues and attracting the lion’s share of inward investment. With more effective policies, untapped rents could boost annual government revenue by up to $20 billion per year.
With about 30% of the world's mineral reserves, Africa is poised to meet the growing demand for critical minerals, as the global shift to clean energy could require an additional 3 billion tons of minerals and metals by 2050. The Democratic Republic of Congo (DRC) already produces roughly two-thirds of the world’s mined cobalt; South Africa holds the world’s largest reserves of platinum and manganese; Zambia and the DRC are major copper producers—each central to electrification and renewables.
Increasing fiscal revenues from natural resource extraction is an important step to ensure countries get their fair share and to boost much-needed public investment in their economies. However, as we saw during the previous commodity price boom from 2004 to 2014, over-dependence on natural resources can also pose dangers. Africa has experienced an increase in the number of resource-rich countries following that boom, with recent discoveries converting more countries into major resource exporters (see Figure 1). Currently, a majority of the region—26 out of 48 countries—demonstrates substantial dependence on resource-derived income, subjecting them to both the advantages of increased fiscal inflows and to the risks associated with price fluctuations, governance challenges, and economic mismanagement.
Figure 1. Resource-rich countries in Sub-Saharan Africa during the 2004-14 commodity price boom
Source: Based on IMF’s Macroeconomic Policy Frameworks for Resource-Rich Developing Countries (2012). Note: The paper defines resource-rich countries as low-income, lower-middle-income, or upper-middle income countries that had either natural resource revenue or exports equating to at least 20% of total fiscal revenue or exports, respectively, over the period 2006–10. South Sudan is not included.
Our study also found that Africa remains largely underexplored, and known deposits remain significantly under-developed. While Africa comprises 22% of the world's main landmass, it attracts only about 10% of global mineral exploration expenditures—roughly $1.4 billion in 2024. Due to this under-investment, mineral reserve estimates are likely far below the actual potential. Limited and outdated geological data hampers development. Improving the collection and sharing of geoscience data can reduce exploration risks and improve perceptions of resource prospects.
We estimate many countries could increase fiscal revenues by capturing a larger share of resource rents. The region on average collects less than others, missing out on about 1.7% of GDP in potential tax and royalty income. Achieving this gain would require better contracts, stronger fiscal terms, improved administration, and governance. Closing this gap would boost development funding while also reducing emissions and environmental externalities caused by the implied production subsidies – yielding a green double dividend.
Opportunities to seize—if policies align
Abundance of natural resources could also be a springboard for industrialization, adding value to unprocessed ores prior to export. African countries need to generate millions of new jobs and shift their economies into higher productivity sectors to reach their ambitious development goals. Building regional value chains, scaling processing where competitive, and implementing smart, regionally inclusive local content policies could play a key role in this.
The African Continental Free Trade Area (AfCFTA) can unlock economies of scale by harmonizing policies, integrating small markets, lowering costs, and fostering shared infrastructure. It can boost intra-African trade, which currently stands at just 16%, and enable cross-border mineral value chains – for example to support inputs to battery and electric vehicle manufacturing. The AfCFTA's potential to generate up to $3.2 trillion in intra-African trade could facilitate specialized, continent-wide value chain participation that no single country could achieve alone.
To realize this potential, the report recommends accelerating implementation of AfCFTA especially in industries associated with natural resources. Actions would include shifting from nationally focused industrial policies to coordinated regional approaches, especially where markets are small. Yet presently, most Local Content Policies (designed to boost the number of goods and services purchased by mining operations from local stakeholders) across Africa remain nationally defined, often legally restricting broader regional participation.
Countries should nonetheless proceed with caution in pursuing strategies of resource-driven development. The historical record of turning subsoil wealth into broad-based prosperity has been mixed, with the 2004–14 commodity super-cycle leaving a poor legacy of undiversified assets and non-resilient economies. Resource-rich countries, on average, consumed the boom - becoming more vulnerable to price shocks and project delays, while poverty and inequality often worsened. And all while fiscal revenues rose—a stark reminder that revenue flows alone do not guarantee inclusive development.
Our book’s bottom line is clear: the region’s untapped resources and pivotal role in the global energy transition create a rare window for economic transformation. But seizing it requires political will and sound policy design—learning from a poor historical record to build capable institutions, accelerate responsible investment, capture fair value, foster regional value chains and the AfCFTA, and convert finite subsoil wealth into enduring human and physical capital. If Africa can do this, the next boom need not bust. It can be the foundation of resilient, diversified, and inclusive growth. Failing to achieve this, the region would not only miss this exceptional opportunity but also could have a more vulnerable future.
This blog is part of a commemorative series marking 15 years of the Africa Development Forum book series co-published by the World Bank and the Agence Française de Developpement.
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