At the turn of the millennium, the United Nations recorded a population of 6bn people. By 2019 the score was 7.7bn people. And now, after analysing shifts in demographics, improved healthcare, sanitation, rights, and education, the United Nations predict the global population will reach 9.7bn by 2050.
Population growth is not expected on all continents. According to the UN: Europe’s ageing population (65 and over) is expected to decline by 10-15%, whereas the population of sub-Saharan Africa is predicted to double to 2.6bn. That’s a population increase of more than Europe and USA combined. This difference is reflective of Africa’s overall lower age distribution; the majority share of population is of working-age (25-64) or is due to enter this age bracket (16-24) over the next 28 years, resulting in higher fertility rates compared to ageing populations. In a society of consumers, a 1.3bn population increase will hike demand for food, everyday products, and higher up the chain, commodities. And with an increased demand for stuff, comes an increased volume of waste. Africa’s frontier market has potential to account for these changes, and excitingly in a sustainable manner…
Africa’s Changing Tech Space
A dominance of technology is characteristic of the Digital Era, predominantly experienced in the West and East. In Africa, prevalence of technology, mobiles and internet access lags behind more developed countries. According to DataReportal’s Digital 2021: Nigeria report, approximately half of Nigerians were internet users – equating to around 104m people – and 187.9m mobile connections were reported. 2020 alone saw a 10% increase in mobile connections. In parallel to the gradual digitisation of citizens, 2021 saw venture deals invest over $5.2bn in African and Africa-based startups, with financial companies receiving the largest share of the cash (60%) and overall, over 80% of companies were tech-enabled (inclusive of companies specifically in the technology sector). Three financial companies in Nigeria received capital from deals valued at over $100m. All companies to achieve unicorn status (valued at over $1bn) were in the FinTech sector.
The ‘Demographic Dividend’
Coupling investment interest with the predicted young adult and working age population booms offers an opportunity for accelerated economic growth: good governance and committed investments in improving education, health and sanitation, infrastructure, job creation and human rights can actualise the ‘demographic dividend’. Protecting rights (such as stopping child marriage and pregnancies), improving education and offering opportunities for further education, and fewer children per household allows greater parental investment per child, a chance for more mothers/women to enter the workforce and an opportunity for greater savings per household. Quite simply, over the next few decades, Africa’s larger workforce will result in a larger national economic payoff.
A demographic dividend will only occur if there’s investment in industry, education, and community. Creating jobs is key to getting people into the workforce. The African Development Bank (ABD) is investing in key initiatives and projects to help modernise and transform industry. Urea manufacturers, Indorama Eleme Fertiliser & Chemicals Limited in Nigeria, received a $100m senior loan to increase capacity, which created 9,000 jobs.
Indirectly, to supply the increased demand for natural gas (component for urea) 330,200 farmers joined Indorama out-grower schemes. Apart from their stated commitments to social responsibility, the company has implemented a training scheme to enhance the professional qualifications of their workers.
We’ve enacted a similar scheme for all employees at Romco, called the ‘Pursuit Program’, offering workplace training for all staff irrespective of length of employment or seniority, enabling them to progress their careers and work up the Romco ranks. It’s about equipping our teams to develop their next career step, even if it’s not with us.
Another such investment example by the ADB aimed at reducing reliance on rice imports in Senegal: a loan which has enabled Senegal to reduce the costs and environmental damage associated with international supply chains.
Keep it local – keep it clean.
The Great Race To Industrialise Africa
There is currently a focus on the industrialisation of Africa; a great race to mine Africa into an economic power.
An article on The Sino–European race for Africa׳s minerals: When two quarrel a third rejoices states:
“The dawn of the 21st century has brought about a new scramble for mineral resources on African soil. China׳s rising wealth levels and the country׳s growing demand for mineral commodities combined with Europe׳s eagerness to maintain its traditional sphere of influence and secure the continent׳s need for resource imports from Africa have added up to an international race for Africa׳s minerals.”
A Powerhouse In Sustainability
With this rise, Africa has the opportunity to meet that challenge by becoming a powerhouse in sustainability. Industrialising Africa through investment in projects that i) directly reduce environmental impact and ensure social responsibility, ii) are committed to adopting innovative and best environmentally-friendly processes, provide the best springboard for ensuring the future of Africa is best positioned for reaching global climate targets, the UN’s Sustainable Development Goals (SDGs), and a economic market most desirable to national and foreign investors.
A cleantech revolution on the continent is already underway, with renewable energy, sustainable infrastructure projects, and recycling at its heart. Romco are proud to be a part of that. Investment in renewables needs to meet the extraordinary growth or the world will struggle to reach its climate ambitions and SDGs.
Through agreeing to the Paris Climate target and the UN’s SDGs, the African government is tied to ensuring these goals are achieved. Over the years, emissions from the continent have been negligible and need to stay that way, despite industrialisation, further encouraging African governance and investors to prioritise growth of an ESG-dominant market. 55% of limited partners think African private equity returns will be similar to or outperform their developed market counterparts within the next five years, and this figure rises to 74% when extended to a ten-year horizon. Therefore, investing in Africa doesn’t just make environmental (or social) sense, it also makes economic sense.
By assessing the great shifts underway, and thinking long-term, Africa has potential to become a powerhouse in global sustainability, as well as a dominant force in the global economic market. Overcoming the temptation of short-term returns will reap greater sustainability and societal rewards as well as raising projections for economic growth.
Despite the opportunity and the benefits, finding the perfect frontier market partner isn’t easy. To explore an exciting player that is helping build Africa into a powerhouse in sustainability, subscribe to our news at https://romcometals.com/news-insight/, visit romcometals.com, or contact us directly at romcometals.com/contact