Africa’s future looks resilient despite a fragmented world

There are many reasons Africa is the growth capital of the world. For a start, the continent’s competitive advantages include a young population, abundant mineral wealth, fertile land and a growing renewable- and distributed-energy sector, said Bill Blackie, CEO of Business and Commercial Banking at Standard Bank. 

Blackie was speaking at the recent Standard Bank Africa Unlocked conference in Cape Town, which drew over 200 delegates from all over Africa, including the 20 countries where Standard Bank has a footprint. 

“GDP growth is not the only reason to be positive about Africa’s future,” Blackie told delegates. Other reasons to be optimistic, he said, included the continent’s vast resources, and particularly those needed for producing renewable-energy infrastructure, such as cobalt, manganese, lithium and copper, as well as the fact that 60% of Africa’s population was below the age of 25. 

Blackie highlighted the structural shift in many African economies away from agriculture and extractive industries, to the manufacturing and trade sectors. “Our goal at Standard Bank is to meet the needs of small- and medium-sized enterprises (SMEs),” he said, “and to partner with them, so that they can realise their growth potential.”

Harnessing renewable energy’s potential

Lungisa Fuzile, group head of Public Policy and Regulation and regional chief executive for South and Central Africa at Standard Bank, said renewable energy was a huge economic opportunity that Africa needed to harness.

“Over half of cobalt reserves in the world are found on our continent,” he said. “Mining the minerals needed for solar panels and wind turbines will generate significant revenue and raise the living standards of millions of people. But to realise this potential we need to forge more meaningful partnerships.”

Acknowledging the infrastructure deficit that exists in Africa, Fuzile said he was nevertheless hopeful that the continent could leapfrog its competitors by playing to its advantages.

“The World Economic Forum says that by 2040, Africa can switch to 76% renewable energy if we embrace hydro, solar and wind power,” he said. “Africa can be a beacon of hope and opportunity for its 1.2-billion inhabitants if it seizes these opportunities, which include having the world’s most fertile arable land.”

Seismic geopolitical shifts

While acknowledging Africa’s strategic advantages, Standard Bank Group chief economist Goolam Ballim was quick to point out the backdrop against which global seismic shifts are occurring. “We are shifting from a world of moderate multilateralism towards geopolitical confrontation and fragmentation,” he said.

This is evident in the UK’s withdrawal from the European Union, the advent of Brics and Brics+, and a spreading emphasis on insular, domestic issues alongside rising populism in countries such as Brazil and the US and across Europe. “Politically, there is a growing tilt away from democracy to illiberalism,” he said. “And, in trade, we are transitioning from globalisation to regionalism.

“In economic terms, power is shifting from the West to the East,” Ballim said, highlighting the rising importance of China. “On the technology front, the digital world is experiencing an accelerating race into the unknown, catalysed by artificial intelligence, quantum computing, the Metaverse, and immersive-reality technologies.”

On the positive side, Ballim said it was encouraging that dirty energy was now making way for cleaner, renewable energy. “Though the momentum behind renewable-energy projects initially came from Western countries, today it is increasingly driven by China, which produces most of the world’s wind turbines and photovoltaic panels,” he said. 

Achieving consistent economic growth is a challenge for many African countries, including SA, whose growth rate for 2024 was projected at 1.1%, said Ballim. “We are seeing multispeed economic growth in Sub-Saharan Africa, with some countries growing consistently, others accelerating, and still others lagging behind.”

Regional integration is key to Africa’s growth

On the topic of regional integration, more efforts are needed to advance agreements such as the African Continental Free Trade Area (AfCFTA), said Fuzile. “We can unlock Africa’s growth only by focusing on more regional integration”, he said.

The 44 member countries of AfCFTA have committed themselves to the elimination of tariffs on most goods and services over the next decade, creating a single, liberalised market. “We need to reduce barriers to capital, facilitate investment and develop regional infrastructure if we want to achieve the sustainable and inclusive future for Africa that we envisage.”

As for SMEs, Blackie said Standard Bank was committed not only to providing the necessary finance to help them grow, but also to sharing knowledge and lending support.

“We are dedicated to supporting entrepreneurs at every stage of their journey — whether they are starting, managing or growing their businesses. We want to understand businesses better so that we can help them form new partnerships and sharpen their competitive edge,” he said. “In this way, we aim to continue our 161-year track record of building multigenerational wealth on the continent.”

Despite its enormous mineral wealth, the biggest resource that Africa possessed was human potential, Blackie said. “We are confident that by investing in businesses and people, prioritising regional integration, capitalising on the digital revolution and adopting new approaches to agriculture, we can unlock Africa’s growth.”

This article was sponsored by Standard Bank.