The Two Africas

Last year, U.S. President Donald Trump told a group of African leaders that the United States would be “shifting from aid to trade.” Washington had already begun to close USAID, the world’s biggest development agency, and many U.S. allies followed suit, cutting their own aid programs in Africa.

Amid the humanitarian cuts, however, international business interest in Africa is growing. The continent possesses huge reserves of the critical minerals the world needs. Foreign investors are eyeing Africa’s young workforce, growing consumer base, and ports located along vital global trade routes. And competition among China, the United States, Europe, India, and the Gulf states is bringing a wider array of investors than ever before. This year, roughly half of the world’s 20 fastest-growing economies are likely to be African.

Yet these gains won’t be distributed evenly across the continent. Many countries are too unstable, underdeveloped, or corrupt to attract foreign capital and will likely stay trapped in stagnation. But the ones that attract sustained outside investment and cultivate their domestic economies could see tremendous growth—and have a chance to follow the industrialization models that turned Singapore, South Korea, and Taiwan into leading markets in the twentieth century. Those African countries that undertake sustained reforms might prosper long enough to provide vast new opportunities for their people and accrue real geopolitical power.

AFTER AID

Africa remains a relatively small player in the global economy. It makes up about 20 percent of the world’s population but accounts for just three percent of GDP and three percent of global trade. Over the past quarter century, foreign direct investment across sub-Saharan Africa has remained relatively flat—around two to three percent as a share of GDP—and most of it has gone to extracting oil, diamonds, and gold and other minerals.

But certain countries and regions are growing quickly. Take southern Africa, which has relatively good interstate infrastructure and low barriers to trade, although many nontariff barriers still exist. Twelve countries in southern Africa have a power pool that connects their grids and allows them to buy and sell electricity among one another, leading to greater efficiency and reliability. The region is also home to the world’s oldest running customs union—made up of Botswana, Eswatini, Lesotho, Namibia, and South Africa. The five countries coordinate trade policy, share customs revenue, and implement a common external tariff. Mature freight and logistics networks increasingly connect the mineral belts in the continent’s southern center to ports on both African coasts. These institutions do not fully eliminate the difficulties of doing business across borders, but they allow investors to think in terms of regional rather than merely national markets. Reforms and efforts to connect are paying off in this part of the continent: Botswana and Zambia are set to grow by 4.7 and 4.3 percent this year, respectively.

Further north, Nigeria, with its vast entrepreneurial ecosystem and growing interest from investors, gives West Africa huge market scale. Kenya, Tanzania, and Uganda form an increasingly valuable East African commercial core. Some smaller African states are thriving: the island nation of Mauritius has developed into an international financial center. Botswana and Rwanda have attracted investment by providing stable policymaking environments, making up for limited scale.

The continent as a whole also has enormous opportunities on its horizon. Favorable demography gives many African countries a potential advantage. As advanced economies grow old in the coming decades, African countries will see much of their population mature into working age. As the demographer Nicholas Eberstadt noted in these pages in 2024, “By 2040, national cohorts of people between the ages of 15 and 49 will decrease more or less everywhere outside sub-Saharan Africa.” Urbanization presents a similar opportunity. According to the Organization for Economic Cooperation and Development, nearly two out of every three Africans will be living in cities by 2050. A richer, more urban African population would attract investment well beyond the extractive industries that have typically dominated foreign capital inflows; Africa’s young population has already made enormous advances in areas such as financial technology and the democratization of financial services.

Africa also still has many of the resources that the rest of the world needs. Sub-Saharan Africa is home to 30 percent of the known reserves of critical minerals. China recognized the strategic significance of these resources early and has spent decades building a near monopoly over the critical mineral industry in many parts of Africa. Nearly all sub-Saharan African countries have signed on to Beijing’s Belt and Road Initiative, the biggest global infrastructure project in modern history, which has funded African trade corridors such as the Addis Ababa–Djibouti and Mombasa-Nairobi railways. China’s overall investment in the continent over the last 20 years has exceeded $350 billion, and Beijing has recently transitioned from a chief lender to a top debt collector in the developing world.

Now the United States and its partners are hoping to make more inroads. Last year, the Trump administration announced deals to secure American access to minerals in the Democratic Republic of the Congo and Rwanda at the same time as it unveiled a deal meant to secure peace between the two countries. The United States and other G-7 countries have backed projects such as the Lobito Corridor, a rail line linking the Democratic Republic of the Congo and Zambia to Angola’s Atlantic coast. When complete, these new lines will transport vast quantities of copper, a metal used in solar panels, heat pumps, batteries, and electric vehicles. The United States also recently extended the African Growth and Opportunity Act, which grants sub-Saharan countries duty-free access to American markets through 2028.

Africa’s geography also puts it in a position to compete in global trade networks. Two of the world’s most strategic maritime chokepoints, the Suez Canal and the Bab el Mandeb Strait, are bordered by African shores. Attacks by the Houthis, the Yemeni rebel group, on commercial shipping in the Red Sea over the last three years have pushed major carriers around the Cape of Good Hope, boosting traffic at ports along Africa’s southern and western coasts. Foreign governments are also racing to gain access to African harbors. Chinese state-owned enterprises have built, financed, or operated at least 78 ports across 32 African countries. Turkey manages the one in Mogadishu and has opened up the largest overseas Turkish military base nearby, where it trains Somali forces. Emirati companies operate ports in more than a dozen countries.

Perhaps the most underappreciated commercial development in Africa has been the recent influx of Gulf capital. Gulf states look to the continent for arable land, critical minerals, political influence, and diversified trade routes. The United Arab Emirates has become, by some measures, Africa’s single largest source of new foreign direct investment, committing nearly $110 billion between 2019 and 2023—even outspending China in some years. Similarly, Saudi Arabia and Qatar deploy sovereign capital into real estate, mining, and digital infrastructure. Gulf sovereign wealth funds, with patient capital and the capacity to move quickly on commercial timelines, are appealing partners. At a time when Chinese lending is dwindling in many places, Gulf states are filling the void. And many African governments prefer the Gulf model, in which investors tend to take equity in a project rather than saddling the borrowing state with debt.

A TALE OF TWO CONTINENTS

This outside interest, however, does not mean that every African country can benefit from it. For African governments, the question is whether they can convert this new race for minerals into durable economic growth and material gains for ordinary people. Continental statistics obscure enormous variation. Over 80 percent of foreign direct investment in Africa is concentrated in just 15 countries, according to the United Nations.

Investors can tolerate many kinds of difficulties. They have less tolerance for uncertainty about whether contracts, regulations, or governments will remain stable long enough for an investment to pay off. Military governments that came to power in coups in Burkina Faso, Mali, and Niger between 2020 and 2023 have drastically changed their countries’ economic landscapes and, worse, created enormous instability and hardship for local populations. Madagascar’s coup last year halted oversight of and reforms to the economy. In many jurisdictions, such as Egypt and Mozambique, sovereign debt distress or the risk of it leaves little fiscal room for other government spending.

A similar distinction applies to Africa’s urbanization and its demographic potential. Currently, big cities including Abidjan, Dar es Salaam, Johannesburg, Lagos, and Nairobi punch below their weight economically because they are cut off from one another by inefficient customs regimes, poor infrastructure, and incompatible payment systems. Population growth by itself cannot generate economic returns at a continental scale. And as the South African writer Jakkie Cilliers argued in these pages, Africa’s youth bulge will only be an asset if young people in the coming decades have access to education, formal employment, and functioning institutions. Otherwise, unemployed young people can become a source of instability. Governments across the continent, therefore, will diverge based on their ability to educate tomorrow’s workers and match their citizens with productive jobs. In sub-Saharan Africa, only 75 percent of people between the ages of 15 and 24 are literate, and much of the continent suffers from brain drain. There are, however, bright spots. Almost all children in Rwanda are enrolled in primary school.

Stable governance and trusted institutions separate those countries that can capitalize on oil, gas, or mineral deposits from those that suffer from resource curses. Zambia and its larger neighbor, the Democratic Republic of the Congo, both have vast mineral reserves. But Zambia’s systematic reforms since its 2020 debt default, such as changes to its tax structure, have helped restore stability and drawn in renewed investor interest, while the Democratic Republic of the Congo, with its continued conflict, presents much higher political and security risks.

In some parts of Africa, the obstacles to foreign investment are more acute. Since 2020, the continent has seen at least nine successful coups. Roughly 40 percent of the world’s conflicts are now in sub-Saharan Africa, especially in the Sahel and in Sudan, which is experiencing what may be the world’s worst ongoing humanitarian crisis. In places where the United States and France have withdrawn their forces, jihadist groups and Russian paramilitaries have moved to fill the vacuum. Even where there are stable governments, corruption and abuse remain endemic. In 2025, Freedom House documented a decline in political rights and civil liberties in 18 African countries, with improvement in just 11.

The questions investors ask in Africa are the same they ask everywhere else: Do governments protect property rights, enforce contracts, allow capital to move in and out, and invest in their people? Can businesses rely on basic infrastructure? Can goods move across borders efficiently? Do laws and regulations survive political change? How African governments answer these questions, rather than the existence of minerals or other potential advantages, will determine whether they can benefit from the current moment.

IT’S ELECTRIC

Among these constraints, perhaps none is more important than electricity. Nearly 600 million people in sub-Saharan Africa still lack access to electricity. No country in the modern era has industrialized without affordable, reliable power.

Africa possesses enormous energy resources, including offshore oil and gas fields along the coasts of Namibia and South Africa and copper—which is used in electric grids—in central Africa. Some governments have made remarkable progress in electrification. In 2009, just six percent of Rwandan households had electricity. By 2024, that figure had jumped to 75 percent, enabling Rwandans to start businesses, connect to the digital world, refrigerate goods, and keep schools running. Kenya and Uganda have made similar pushes.

Electrification will help unlock continental scale. Africa’s cities can grow rapidly but may not produce markets large enough to justify major investments if their factories lack reliable power to scale production and if barriers to trade—including the spoilage of goods—and undeveloped infrastructure continue to fragment consumer markets, supply chains, and capital. Something as simple as electricity that keeps more businesses and markets open at night can promote intra-African connections and commercial opportunities. To electrify their countries, governments will need to invest in power generation, transmission lines, and transformers.

Another way to overcome fragmentation and boost growth is to develop the African Continental Free Trade Area, a pact ratified by 50 of Africa’s countries aimed at creating one of the world’s biggest duty-free zones. Trade under its new terms is progressing, but governments still have a long way to go to implement it fully, including by harmonizing trade rules, tariffs, and customs procedures. Linking markets across African countries will be key to diversification, moving up the value chain, and generating long-term economic transformation.

There is unlikely to be a single African economic story. The same forces that are making the continent more important may also widen the differences among its countries and regions. But African leaders have a great deal of agency over which path their people take. The countries that open themselves up, to both intracontinental trade and outside money, are the ones that will likely fare best.

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