Paul Collier, professor of economics at Oxford University, pens an interesting piece in this month’s McKinsey Quarterly (“The case for investing in Africa”) that touches upon the continent’s untapped resource potential:

“Africa is the last major region on Earth that remains largely unexplored. In the long-explored countries of the OECD, the average square kilometer of territory still has beneath it around $114,000 of known subsoil assets, despite two centuries of intense extraction. In contrast, the average square kilometer of sub-Saharan Africa has a mere $23,000 of known sub-soil assets.  It is highly unlikely that this massive difference is due to a corresponding difference in what is actually there.  Rather, the difference in known assets is likely to indicate an offsetting difference in what is awaiting discovery.”

For those who buy the commodity super cycle theory–namely that we are in the midst of another secular bull market in commodities, confirmation of which can be seen in the strong upward trajectory of demand for home wares and autos in emerging markets where ever-expanding middle class populations perpetually strive for a better standard of living–then Africa’s commodity export markets, which Collier opines can grow five-fold, may be one important factor behind impending, per capita income growth. 

Another pillar supporting an inevitable increase in global wealth transfer to Africa, Collier writes, will be labor related:

“Per capita GDP in China is already above the global average, so its days as the low-wage factory of the world are limited. Africa will soon be the last remaining major low-wage region. It has an enormous coastline, more proximate to both European and North American markets than Asia is. Over the past three decades, offshoring shifted labor-intensive manufacturing from the OECD countries to Asia. In the next decade, expect the same process to begin shifting these activities from Asia to Africa.”

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