There are four main reasons why many African countries have not benefited to the full extent from their natural resources. These are broadly an over reliance on commodities, a distortion of incentives (hollowing out of the manufacturing sector, corruption, conflict etc.), volatility resulting in fiscal policy constraints and low levels of value add.
First, too much reliance on commodities. In three-quarters of African economies, the share of primary commodities in total exports is 50% or more. In one-third of the continent’s economies, that share rises to at least 90%. Concentration doesn’t just exist by sector, but by commodity too. In eight African countries, one single commodity accounts for more than 70% of exports. Many, though, rely on a combination of agriculture, mining and energy.