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Top 5 Richest Countries in Africa: How They Built Their Wealth

August 2, 2023
Economy
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Africa is one of the most mineral rich continents in the world, holding 30% of the world’s natural resources. Despite this, Africa is also one of the poorest continents in the world. According to the International Monetary Fund, Africa is the 2nd poorest continent on the planet, only barely beating Oceania despite Oceania containing just one country. It is an unfortunate fact that when most people think of Africa, they think of poverty. But some countries have managed to break this stereotype and create an economy that pulls their population out of poverty. But just how did they manage to do this? How did these countries succeed where so many African countries have failed and built their wealth?

5. South Africa – GDP per Capita (in ₦): 5,640,472

South Africa’s economy has its foundations dating back to its time as a part of the British empire.

In the 19th century, Gold and diamonds were discovered within South Africa’s borders and the country received investments from foreign bodies. Due to the surge of investors into South Africa, the Johannesburg Exchange & Chambers Company (now known as the Johannesburg Stock Exchange) was founded in 1887 and has regularly contributed to the South African economy. As of April 2023, according to CEIC data, this stock exchange is valued at 969.7 trillion naira.

This was not the only way that the foreign investors formed the foundation of South Africa’s modern-day economy. Due to the investments into the mining operations across South Africa, mining and exporting precious minerals have become a big part of South Africa’s economy. South Africa is Africa’s second largest producer of gold and is the world’s largest producer of platinum, and in 2021 the mining industry contributed 10.1 trillion naira.

4. Equatorial Guinea – GDP per Capita (in ₦): 6,001,846

Ever since the 1980s, Equatorial Guinea’s economy has relied almost entirely on its exportation of petroleum. It is the third largest producer of oil in Sub-Saharan Africa and as of 2021, 80% of Equatorial Guinea’s exports consisted of Crude Petroleum and Petroleum Gas, earning 3.1 trillion naira from these exports alone. Outside of petroleum products, Equatorial Guinea does have infrastructure for the production and export of cocoa, coffee and timber dating back to when it was colonised by Spain, but these industries have been mainly abandoned in favour of focusing on the production and exportation of petroleum products.

It should be prefixed however, that due to its reliance on the exportation of petroleum, its economy is the least stable out of the countries on this list. Over the years, it has dropped from the top country in Africa by GDP per Capita to the 6th, and then returned to the top 5 again only to drop out of the running.

Read Also: 6 Socio-Economic Benefits Of Nigeria’s Fuel Subsidy Removal

3. Gabon – GDP per Capita (in ₦): 6,903,683

Gabon has two main pillars which are supporting its economy: its exports of crude oil, and its positive relationship with France.

Gabon is rich in natural resources, as it is one of the world’s largest producer of manganese and it also has mines of iron ore, uranium, diamonds and gold. Nonetheless, as with most African countries, its most valuable natural resource is crude oil. Gabon is the fourth largest producer of oil in Sub-Saharan Africa. And as of 2021, Gabon is the 26th largest exporter of crude oil in the world, having exported 1.71 trillion-naira worth of oil that year. Ever since the 1970s oil has represented most of the country’s income.

Gabon’s relationship with France dates to the colonial era. Gabon was originally colonised by Portugal during the 15th century and suffered devastation typical of victims of European colonisation such as slavery. The country’s fortunes turned around when France and Gabon signed an agreement in the 1800s. This agreement ended slavery and established France as a sovereignty over the country. From then until now, Gabon and France maintained a friendly and beneficial relationship even after Gabon became independent in 1960. As a result, Gabon is a part of the CFA (Communauté Financière Africaine) and uses the CFA franc as its currency. This grants Gabon’s currency stability as it has a fixed exchange rate to the Euro, protecting it from the usual issues of inflation in currencies across Africa.

2. Mauritius – GDP per Capita (in ₦): 7,280,247

Before the 1980s Mauritius’ economy was mainly driven by the production and exportation of sugar, with sugar forming 90% of the country’s value in exports. The sugar boom however ended in the 1980s and the country suffered severe economic consequences, such as gaining a debt worth 2.9 billion naira, a sharp rise in taxes on sales as well as their currency inflating. After this the country pivoted its strategies and diversified its economy so it would never suffer like that again.

The country downsized how much sugar it produced and exported; raw sugar now constitutes 8.4% of the country’s exports. It now also exports other cash crops such as tea and tobacco. It joined the International Monetary Fund (IMF) to stabilise its currency and reduce taxes levied on its sales, and it set up the Stock Exchange of Mauritius to attract foreign investors. Higher interactions with foreigners invited trade, skilled workers and tourism, which built more businesses and further diversified the economy.

1. Seychelles – GDP per Capita (in ₦): 11,715,073

The biggest contributor to Seychelles’’ economy is tourism, providing 39% of the country’s GDP before COVID in 2019. While this percentage did fall during COVID, patterns shown by World Data indicate that tourism is once again becoming a major player in Seychelles’ economy, having formed 37.4% of its total GDP in 2021. It started with the opening of an international airport in Mahé, the island containing the country’s capital city, Seychelles has received thousands of tourists per year. It is ranked 138th most popular tourist site in the world and the best tourist place in Eastern Africa.

The country relies heavily on tourism and its economy is formed around it. In 2021, according to OEC, the country spent 1.27 trillion naira on its imports. It imports a large number of foodstuffs, machinery and petrol products in order to be used in its various tourism businesses such as hotels. The government has recognized a weakness in relying on tourism, as the country did suffer a loss thanks to the quarantine sanctions instigated by COVID. They have encouraged the development of farming and fishing, but these small businesses are still dwarfed by Seychelles’ tourist sector.

What We Can Learn

A factor which was not touched upon with these countries is that they all faced their own unique issues, ranging from volatile cultures to corruption within the government. Despite this, one thing which each of these countries did is seize an opportunity that was either created due to the foundations of their history or was found due to pure happenstance. Nigeria ranks 21st on this list, but it is rich in resources and has potential for economic growth. Generally, as economies grow, some countries overtake others in the rankings. If you’re interested in the rankings last year, take a look at this article.

Ultimately, we can all apply lessons from these affluent countries to our personal lives. With the help of financial advisors at Coronation Merchant Bank, you too can learn to build and maintain wealth. To get started, click here.

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