As the global economy begins to exit recession and begin consuming again, without the property boom and easy credit to finance a recovery, it will be natural resources that come to the fore again. Traditional resources that allow for the production of other goods and services will be the drivers of growth and its sustainability. For these resources, how much does Africa have a role to play, and which countries will benefit most?
Unsurprisingly, no African country is among the world leaders in production of some of the key agricultural products traded globally. The USA government subsidizes its products heavily through grants and import tariffs, the European Union has the infamous Common Agricultural Policy that safeguards the minority of the population on that continent, namely the farmers, by allocating almost €50bn, nearly 50% of the EU’s budget that keeps their farmers in business and protects their markets. China and India are also infamous for protecting their own domestic agriculture sectors, and all this combined with the deficiencies in the African agricultural sector such as low productivity mean that no single African country competes globally.
Soy-beans are controlled by the USA, that has 36% of global production, followed by Brazil and Argentina with 28% and 21% respectively. Soy-beans are important, especially with the genetically modified versions that will have Omega-3 oils in them (as found in fish), and will help in adding to a balanced diet, a crop that can be grown in Africa. Corn is again dominated by the USA that has 42% of global production, China and Brazil follow with 19% and 7%. Corn is one of the staple meals of Sub-Saharan Africa, and with no African country in the Top 10 of global producers, there is little wonder why there is a deficit in production, especially when allied with the availability of cheaper imports. Wheat is now headed by China that has 18% of global output, India with 12%, USA 9%, and Russia 8%. Rice is dominated by China that has 30% of the global production, followed by fellow South Asian countries, India 22%, Indonesia 9%, Vietnam 6%.
Cotton is another similar tale of dominance by the big economies, China 31%, India 20%, USA 16%. The highest ranking African country is Burkina Faso that is 11th in the world with 875 000 bales of cotton. Rubber, which is made from trees sees Thailand lead the market with 34%of production. Indonesia has 30% and Malaysia with 12%.
Silver is dominated by the America, Peru of 17%, Mexico on 15%, China on 13% and Peru 9%. Gold however sees the first African nation appear, South Africa on 11%, 1% lower than China which is the global leader. In times gone by, South Africa was the leader, but with problems such as labour strikes and insecure power supplies, output has declined compared to historical levels. Gold is seen as a secure investment in uncertain economic times, and with the price having broken the US$1 000 mark in 2008, increased production in gold will reap rewards for South Africa. The rest of the list is made up by Australia, USA and Peru on 11%, 10% and 7% respectively.
Diamonds, another preserve that was often associated exclusively with Africa, namely Botswana, has seen Russia eclipse the small African country as the global leader with 23% of global output. Botswana has 20%, The DR Congo 17% and Australia 11%. Botswana has felt the effects of the global slowdown, and after the furore caused by Debswana, the national company that mines diamonds with De Beers over hoarding to influence the price, they have now resorted to reducing output and keeping the diamonds in the ground instead of a warehouse. However the Botswana economy is looking to bounce back in a big way in 2010, with a projected rate of 14.4% growth, most will be driven by diamond sales. The DR Congo has a reputation of selling ‘conflict diamonds‘, but with each passing year, the rebels are driven back and more mines are open to more transparent operations, thus increasing the output in diamonds that meet the Kimberley Process.
Oil is still ruled by Saudi Arabia that has 20% of global output, followed by Canada and the oil sands at 13%. A country that could have featured is Nigeria, but with the ongoing problems in the Delta region, production will not escalate as hoped for. The other producers on the west coast such as Angola, Equatorial-Guinea haven’t yet got the infrastructure for them to rise up the list. Uranium is another fuel that could make a comeback this century, Canada the leader at 23%, small African nation Niger is 5th with 8% of global production. Niger is still one the poorest countries in the world despite having large deposits of this valuable fuel, their future prospects will be linked to how they exploit their wealth. Natural Gas is also a Eurasian affair, Russia 26%, Iran 16%, Qatar 15% the world leaders.
Thus, this shows that Africa still has a long way to go to exploit their natural resources, the agricultural sector is being expanded with the land acquisitions by foreign investors en-masse which should increase productivity and production. Minerals are high in quantity in Africa, but some teeming problems such as power supply and added investment hold it back, whilst fuels on the west coast of the continent are only now receiving the investment that will catapult them forwards.