Located in a remote corner of southeastern Guinea, the lush, green highlands of Simandou are at the centre of a transformation that is being felt across Africa. Beneath the tropical forests, which are celebrated for their ecological richness, lies another prized asset: one of the world’s richest but least developed, and most coveted, repositories of iron ore, the core ingredient for making steel. Fuelled by rapid growth in emerging markets, world prices for iron ore have spiralled and global investors are scrambling to unlock new sources of supply. Today, multinational companies from six continents are competing for a stake in Simandou’s ore, with billions of dollars of investment in prospect. Exports are set to boom, generating a surge in economic growth.
What does this mean for the people of Guinea, one of the world’s poorest countries? Will resource wealth ensure better lives for themselves and future generations? Or will Guinea become another victim of what some commentators see as Africa’s endemic resource curse?
These questions go to the heart of this year’s Africa Progress Report, which focuses on oil, gas and mining. Over the past decade, Africa’s economies have been riding the crest of a global commodity wave. Extractive industries have emerged as a powerful engine of economic growth. Surging demand for natural resources in China and other emerging markets has pushed export prices to new highs – and the boom shows no sign of abating.
Africa’s petroleum, gas and mineral resources have become a powerful magnet for foreign investment.
With new exploration revealing much larger reserves than were previously known, Africa stands to reap a natural resource windfall.
The challenge facing the region’s governments is to convert the temporary windfall into a permanent breakthrough in human development. Effective and equitable stewardship of Africa’s natural resource wealth could transform the region. Apart from building manufacturing industries, the development of natural resources could provide the revenues needed for investment in smallholder agriculture, food security, employment, health and education.
Governments have a responsibility to future as well as present generations to harness natural resource wealth.