Seeds of Opportunity: The African Growth Series
April 2023 | Issue 1
In this week's issue, you will learn more about:
- AFRICA OPPORTUNITY: The Next Frontier for Sustainable Development
- AFRICA OPPORTUNITY: Potential to Mine Critical Minerals in Africa
- AFRICA TREND - Digital Innovation: The Future of Mining
- AFRICA TREND: Technologies to Improve Mining Safety
- AFRICA OPPORTUNITY: The Growth of the Automotive Industry in Africa
AFRICA OPPORTUNITY: The Next Frontier for Sustainable Development
The African continent is fertile ground for investment in sustainable development. The market size of sustainable development in Africa is expected to reach USD 49.7 billion by 2028, growing at a compound annual growth rate (CAGR) of 12.6% from 2022 to 2028. This growth is driven by a number of factors, including the increasing demand for eco-friendly products and services, the growing awareness of the importance of environmental protection, and the increasing availability of funding for sustainable development projects.
Some of the most promising startups in the African sustainability market include BioPre, HydroIQ, Momint and Sun King. These startups are using innovative technologies and business models to address some of Africa's most pressing challenges, such as energy poverty, water accessibility and environmental degradation. Their success is a testament to the growing opportunities in the African sustainability market.
These are just a few examples of the many businesses making a difference in the African sustainability market. The market is growing rapidly and there are a number of opportunities for investors and entrepreneurs interested in making a positive impact on the continent.
AFRICA OPPORTUNITY: Potential to Mine Critical Minerals in Africa
The world is undergoing an energy transition driven by the need to decarbonise all industrial sectors. For this transition to be successful, it must be ensured that these metals are available and affordable. Africa is a resource-endowed region, already producing an abundance of critical minerals and hosting even more resources in its deposits. Minerals such as lithium, copper, cobalt and bauxite will play an increasingly important role in Africa’s mining sector as the global demand for these will grow immensely to support the transition. Lithium prices more than doubled in 2022 as demand from the EV industry outstripped supply; a similar trend is seen in the prices of copper and cobalt. Big international mining houses largely lead the development of these mines. Still, the African population and surrounding communities must benefit first-hand from the exploration and production of these critical minerals. It is crucial that African countries are determined to retain more of the value of their resources than in the past, which means not just mining them but processing them before export.
AFRICA TREND - Digital Innovation: The Future of Mining
With rolling blackouts, natural disasters and inflation, the outlook for the future seems bleak as the country suffers weak growth and a lack of job prospects. However, significant digital advancements across sectors indicate a clear sign of better tidings in 2023. A sector that stands out is the mining and metal industry, where digital technology advances and use cases are continuously being developed and proven to open endless possibilities and opportunities. Some technological advancements include deploying private 5G networks in mines, which can transform the mining industry, enabling improved efficiency while streamlining processes and reducing costs. These technologies can significantly improve workers’ safety, for example, by using solutions that track and monitor workers’ body temperatures and heart rates a few kilometres underground. Furthermore, ultra–high bandwidth and ultra–low latency of 5G can allow for real-time communication among mineworkers, unlocking critical insights into mine operations that are actionable in real-time.
Accordingly, the mining and metals industry stands out as one of the sectors with positive potential due to the proliferation of technology. Expanding these technologies will propel both South African and African businesses into a digital future, creating more opportunities for growth through skills development and job creation.
AFRICA TREND: Technologies to Improve Mining Safety
Mining-related accidents persist, but safety-focused technological innovations have contributed to a 5.9% reduction in deaths in South African mines alone. From the Democratic Republic of Congo (DRC), Cameroon to South Africa, injuries and deaths from mining-related accidents plague the sector, from landslides burying miners alive to fatal injuries from falling debris. It is vital to recognise the value of human life and solve the problem of poor infrastructure and safety in mines across the continent. Africa accounted for 63% of mining-related deaths worldwide in 2021. Africa's largest mining sector, South Africa, registered most of the fatalities on the continent. Despite this, a deliberate culture shift centred around safety, various training and top-down collaboration have helped the industry introduce technologies to reduce fatalities by 5.9% over two decades. IIoT, such as early warning systems for seismic activity, pedestrian detection systems and weather forecasts, can improve disaster management planning. More nimble technologies include apps such as Min Security, developed by Victoire Shukuru, which works with an electronic belt and integrates GPS tracking technology. Using the app, managers can monitor workers' movements, pit temperatures and oxygen levels and alert them if workers are unsafe. Implementing various low, medium, and high-cost technologies can help reduce mine-related accidents and eliminate potential risks.
AFRICA OPPORTUNITY: The Growth of the Automotive Industry in Africa
The African Continental Free Trade Agreement (AfCFTA) will transform the automotive industry in Africa. Connecting over 1.3 billion people to a single market, the continent’s automotive industry is expected to grow to USD 42 billion by 2027 (a 40% increase in value from 2021 (USD 30 billion) due to the AfCFTA. The promise of frictionless trade in Africa will allow this industry to seize the opportunities from the advantages of economies of scale, which is essential for the competitive manufacturing of automotives. Decreased tariffs across the continent for necessary raw materials will also result in a more dynamic industry. In addition, the socio-economic milieu within Africa will serve to impact on this industry positively. With a booming population (forecasted to reach 1.5 billion by 2025) and increased access to credit and funding, the automotive industry will experience higher demand. This opportunity has been recognised by several stakeholders, such as Afreximbank and the African Association of Automotive Manufacturers who have partnered to support the industry and committed USD 1 billion through direct financing.
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
