Animation -- Riding the crest of a global commodity wave

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• published: 16 Oct 2013
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Riding the crest of a global commodity wave, natural resources have fuelled a decade of rapid growth in Africa, but too few Africans have benefited. Infographics in this animation are drawn from this year's Africa Progress Report, "Equity in Extractives - Stewarding Africa's natural resources for all". Riding the crest of a global commodity wave, natural resources have fuelled a decade of rapid growth in Africa. The continent has now joined the world league of high growth economies. In the first decade of this century, sub-Saharan Africa was one of the fastest growing regions in the world. It suffered the impact of the 2008 financial crisis less than other regions too. Resource-rich countries such as Sierra Leone, Niger, and Angola also grew faster than China and India. With significant oil, gas, and mineral reserves, Africa's resource-fuelled growth is expected to continue. By one estimate, the continent hosts 30 percent of the world's mineral reserves, including significant proportions of gold, platinum, diamonds, and manganese. South Africa alone produces 77 percent of the world's platinum, while the Democratic Republic of the Congo provides 53 percent of its cobalt. Africa's oil, gas, and minerals, have brought increasing foreign investment and revenue to the continent. Indeed, private flows, including foreign direct investment, have been outpacing international aid and setting Africa on the road to self-sufficiency. In practice, though, too few Africans have benefitted from the natural resources beneath our soils and waters. Four of sub-Saharan Africa's top oil producers have disappointing human development indicators. After a decade of the world's fastest growth rates, for example, Equatorial Guinea now has a higher level of income per capita than Poland. But three quarters of the population live in poverty and its child mortality rates are among the highest in the world. Children in Equatorial Guinea are 20 times more likely to die before their 5th birthday than in Poland. Meanwhile, Angola's economy has also been growing rapidly for the past decade. It now has a higher income per capita than Vietnam, but Vietnamese people can expect to live almost a quarter century longer than their counterparts in Angola. This year's Africa Progress Report looked at these issues in more detail to see why Africans do not benefit more from their natural resources. In the Democratic Republic of the Congo for example we examined five mineral deals between 2010 and 2012 that involved the systematic undervaluation of the country's mineral concessions and sale to unknown buyers. These deals cost the country the equivalent of US$ 1.36 billion, roughly double the combined annual budgets of health and education. Meanwhile, just one single technique to pay less tax -- known as trade mispricing -- has become a major issue for the continent. By mispricing the value of goods that it takes from a country, a multinational can effectively limit its tax obligations. The scale of this trade mispricing has become unethical and unacceptable. Africa now loses more through trade mispricing than it receives in either international aid or foreign direct investment. The Africa Progress Panel remains upbeat about the prospects for Africa. We see good momentum for change among governments, multinationals, and the international community too. African countries are leading the charge to become compliant with the Extractive industries Transparency Initiative, for example. The Africa Mining Vision offers a compelling agenda for change and was produced by the African Union and the Economic Commission for Africa. Africa's natural resources offer excellent opportunity to lift millions out of poverty. But Africa can still benefit from better policies and leadership. This year's Africa Progress Report recommends policies for African governments, multinationals, and the international community alike. Among their recommendations, the Panel recommends that: African governments should process minerals, publish contracts, and target the poor with their public spending. The international community should clamp down on tax evasion and avoidance, and tackle money laundering. International business should clarify their ownership structures, disclose payments to governments, and combat transfer pricing. Visit our website to find out more. www.africaprogresspanel.org [ENDS]