Africa, rich in biodiversity and raw materials, seeks to better reflect its economic potential. The African Development Bank (AfDB) proposes to integrate natural resources into the calculation of gross domestic product (GDP). A reform that can influence the economic perception of the continent and reduce the burden of its debts.
Reassessment necessary for African economies
Traditional GDP indicators favor manufacturing, services and trade, relegating natural resources to the background. However, these are at the heart of the economy and the environment. The continent represents 20% of the world’s land area, is home to a quarter of mammal species and has a sixth of the planet’s forests. Important green assets to capture carbon.
Faced with this undervaluation, African leaders are calling for a new approach. « It is time to review the way we evaluate African economies », says AfDB President Akinwumi Adesina. This high dignitary effectively reaffirmed the ambition at the African Energy Summit Mission 300 in Dar es Salaam.
The figures speak for themselves. In 2018, Africa’s official GDP reached 2,500 billion USD, while the value of its natural capital amounted to 6,200 billion USD according to the AfDB. A glaring gap, almost three times higher, which reveals a wealth that is largely ignored. Africa is not only asking for financial aid, but recognition of its ecological contributions. The request will be made at upcoming international summits, such as the G7 and G20, to convince financial institutions to review their criteria.
Impact on financial markets and debts
Currently, the debt-to-GDP ratio penalizes African countries. This calculation based on an underestimated GDP leads to expensive financing costs. In fifteen years, Africa’s external debt has increased from 150 billion USD to 500 billion USD, often contracted at high rates. Nigeria and Kenya, for example, are issuing bonds at nearly 10%, well above global standards. Integrating natural resources into GDP could improve their credit ratings, attract investors and reduce borrowing costs.
However, not all agencies are yet convinced. China, the main bilateral creditor of many African countries, supports this reassessment, but other institutions remain cautious. For its part, the World Bank recognizes the importance of renewable natural assets, estimated at 6% of global GDP. Zambia, which has just emerged from a debt restructuring, strongly supports the initiative. Its President, Hakainde Hichilema, insists on the need to mobilize more funds for development.
Challenge of monetizing natural resources
If this reform sees the light of day, transforming this wealth into money remains complex. Carbon credits, revenues from the sale of CO2 emission rights, offer a way forward. However, their benefits remain limited. Kariuki Ngari, CEO of Standard Chartered Kenya, tempers enthusiasm: « You can get more money, but can you really pay back more?” International creditors, however, remain on their guard.
This valuation is also part of the fight against climate change. African forests capture carbon, while its subsoil is full of strategic minerals. In addition, many African lands are full of lithium, essential for electric batteries. However, this potential remains underexploited. Recognizing these assets could reduce the continent’s financing gap and strengthen its role in the energy transition.
At COP 29, Kenyan President William Ruto and his Congolese counterpart Denis Sassou Nguesso are defending this vision. However, without firm commitments from international donors, these ambitions are struggling to materialize. As Amina Mohammed, Deputy Secretary-General of the United Nations, points out, « the exorbitant costs of capital are holding back sustainable development ». Africa holds the keys to an economic and ecological revolution. The question remains whether the world will agree to change its glasses to see it in its true light.
