Africa's growth hinges on minerals and energy build-outs
Minerals and power build-outs shape the continent's delivery challenge
Africa’s route into the global investment boom runs through two practical build-outs: the minerals still waiting in the ground and the energy infrastructure now under construction across the continent. That is the operational core of KPMG’s latest Global Economic Geopolitical Outlook, and it is where Frank Blackmore, the firm’s lead economist for South Africa, sees real delivery potential amid a turbulent global backdrop.
Blackmore, speaking to Simon Brown in a podcast discussion of the quarterly report, frames the shift in concrete terms. Investment spending, not consumer spending, is becoming the main driver of global growth, particularly in Europe and the United States. Much African growth remains consumer driven, but the continent can position itself to attract a share of the new investment wave if the groundwork is done correctly. Consumer spending is not going away, Brown notes. Rather, investment spending is picking up in a structural shift that will play out slowly and could ultimately benefit consumers across the continent.
The report opens with the forces buffeting the global economy: the war in the Persian Gulf, US-China competition over technology and specifically artificial intelligence, hybrid warfare that includes conflicts such as Ukraine alongside AI-driven cyber attacks, strained critical supply chains and the push for resilience within them, and trade fragmentation. On their own, Blackmore observes, these trends offer little good to much of the world. But step back, he argues, and a massive positive investment trend is visible in data centres, AI and the surrounding industries, and Africa is well positioned for two reasons.
The first is mineral. The continent holds a large share of critical minerals still waiting to be discovered, mined and processed, an advantage Blackmore says must be leveraged. The second is energy. Africa is already spending heavily on expanding its energy infrastructure, and the AI race is increasingly an energy play. If the continent can invest in surplus, cheap and sustainable energy infrastructure, it can attract a greater portion of the AI investment spend.
Brown draws the parallel to telecommunications: Africa skipped fixed-line copper entirely and went straight to mobile, a leap that paid off in areas such as payments. The same leapfrog is possible in energy, bypassing the ageing coal-based infrastructure of Europe and North America and going directly to new transmission and reliable green generation. Blackmore agrees, and points to the delivery model. Many African governments lack the fiscal might to fund this build-out themselves, but South Africa’s experience shows energy can be a private-sector play, just as communications was. If markets are liberalised and transmission, along with the buying and selling of power onto the grid, is properly controlled, he expects massive private-sector investment to follow.
Scale remains a practical constraint. Africa has 54 countries, and nearly half have populations under 10 million, which can leave a working-age population of perhaps 2.5 million. Workforces of that size cannot support diversified economies, so delivery has to happen in regional pools. Blackmore sees the direction of travel in the African Continental Free Trade Agreement and the emergence of southern, central, northern and western regional hubs, later expanding continent wide. Getting there requires harmonising policies and working transparently with outside investors so that gains are broadly shared rather than flowing returns to a few.
Meanwhile, the geopolitical upheaval of the past decade, from Brexit through Trump’s first term, brings both risk and opportunity, Brown notes, and the task is to balance the two and end up on the right side of the equation. Blackmore’s closing point is about execution: the continent holds resources the rest of the world wants, and the work now is to leverage them cleverly, first to develop the continent toward its goals and second to create decent wealth for African economies. Critical minerals, in other words, become a negotiating tool in the delivery process, not an end in themselves. Whether the regional hubs and liberalised power markets can move from blueprint to build-out is now the question the continent’s operators have to answer.
Q&A
What two build-outs does KPMG identify as Africa's route into the global investment boom?
The minerals still in the ground, particularly critical minerals waiting to be discovered, mined and processed, and the energy infrastructure now under construction across the continent.
How could Africa attract a greater share of AI investment spend?
By investing in surplus, cheap and sustainable energy infrastructure, since the AI race is increasingly an energy play, and by liberalising markets so transmission and the buying and selling of power onto the grid are properly controlled, encouraging private-sector investment.
Why does scale constrain delivery across the continent?
Africa has 54 countries and nearly half have populations under 10 million, leaving working-age populations of perhaps 2.5 million that cannot support diversified economies, so delivery must happen in regional pools such as southern, central, northern and western hubs.
What role do critical minerals play in Africa's strategy?
They are a negotiating tool in the delivery process rather than an end in themselves, to be leveraged first to develop the continent toward its goals and second to create decent wealth for African economies.