Tariffs are rightly a hot topic in Africa. With President Donald Trump’s latest round of rate announcements, many African nations will suffer. One necessary response is to tackle the tariffs themselves. Trump is far from immovable on these issues. However, part of the response lies firmly in our control. It’s a challenge operators and policymakers have struggled with for decades: beneficiation.
Rich in deposits and fertile farming land, African countries have a long history of harnessing these in an extractive manner. We pull minerals and hydrocarbons out of the ground and grow and harvest crops, only to send the raw materials far away for beneficiation. In the more perverse examples, these raw materials are refined overseas and then sold back into Africa.
Consider oil. Across the continent, about 7-million barrels of crude are produced every day. Roughly 40% of that is refined locally. The bulk is sent abroad, processed there, and then sold back into Africa at a higher price.
It doesn’t take a strategic visionary to decipher the opportunity this creates. The materials and the demand are there, so let’s onshore! However, that is easier said than done. While each necessary element may be simple — a highway, the refinery, technicians, some capital and so on — the ecosystem is often lacking.
That complex arrangement that Adam Smith’s “invisible hand” silently puts together over time can’t be snapped into place overnight. But it may be gathering momentum.
A spark in a petrol factory
There are signs that a beneficiation boom might just be starting. The headline-winning example is in Nigeria. Aliko Dangote, Africa’s richest person and the man behind the Dangote cement empire, has built the Dangote Petroleum Refinery. Though inaugurated in May 2023 in Lekki, a coastal city about 20km from Lagos, it is still ramping up capacity. At full tilt, the $19bn project, covering 2,635ha and boasting its own 435MW power plant, will process 650,000 barrels a day.
Current processing output is about 550,000. Roughly half of the crude is from Nigerian suppliers and the other half from the US. The target is for this facility to process all of Nigeria’s oil by the end of 2025 and then to develop a surplus to export. The first destinations will probably be Namibia, Zambia and Botswana.
Momentum?
There are other examples of heartening progress. Ivory Coast, the world’s largest cocoa producer, has started investing in local processing of cocoa derivatives such as liquor and butter. The country is making similar strides with cashew nuts. Local processing grew from almost zero 15 years ago to 30% by 2024. The next target is 50% by 2030.
In Zambia, the state-owned Industrial Development Corp recently announced an agreement with China-headquartered Fujian Xiang Xin Corp to build a $1.1bn oil refinery in Ndola, in the famous Copperbelt. Far smaller than Dangote’s mega-refinery, this should nonetheless grow to meet local fuel needs of about 60,000 barrels a day and potentially expand to exporting.
Even in troubled Mali, the military junta recently laid the first stone for a gold refinery in partnership with Russian conglomerate the Yadran Group. This is part of a broader project to assert economic sovereignty. At full capacity, this would eventually quadruple Africa’s second-largest gold producer’s capacity to about 200t per year, worth more than $20bn at current prices.
Comeback kid?
Bucking the trend is South Africa. Over the past five years oil refining capacity in Africa’s largest economy has been slashed in half and now sits idle. One result is a change at the top of the log of Africa’s largest fuel importers. South Africa has overtaken Nigeria on this list. In the first quarter of 2025 the country imported 4.2Mt of refined oil products while Nigeria brought in just 3.1Mt.
The government-owned Central Energy Fund and a variety of businesses, including Vivo Energy and Glencore’s Astron Energy, are driving projects that would, if successful, add about 1-million barrels of capacity a day.
Beneficiation boom? Not yet. But tariff tumults and much more demand it. Beneficiation means scaling up the value chain, developing more skills to create more complex outputs, and generating (or saving) more foreign currency on our own terms.
Vietnam and South Korea made the seismic move from extractive to productive in less than a generation. Perhaps tariffs will help spark and drive similar moves in Africa.
* The Centre for African Management & Markets at the Gordon Institute of Business Science conducts academic and practitioner research and provides strategic insight on African markets. Macleod is a founding member
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