Critical minerals are quickly becoming one of the defining economic and geopolitical issues of this decade. They are essential to the global shift towards cleaner energy and are used in everything from electric vehicles to battery storage and defence technologies. As demand rises, attention has turned once again to Africa, which holds a significant share of the world’s cobalt, lithium, graphite, copper and rare earth reserves.
This renewed attention comes at a time of intense global competition. Countries and companies are moving quickly to gain access to these resources, and African governments are under pressure to respond. The potential rewards are substantial, but history shows that resource wealth in Africa has not always led to broad‑based development. Too much value has been lost when institutions are weak, bargaining power is lopsided, and early decisions are made without sufficient technical expertise.
Getting these early-stage choices right matters. How licences are awarded, contracts are structured, and revenue terms are set can determine whether minerals benefit the wider population or simply enrich a few. This is where public financial management plays a decisive role.
A Familiar Risk in a Faster-Moving Environment
The risks linked to natural resources are well known. Recent analysis of Africa’s economic outlook highlights how the failure to manage scarce resources has imposed large and recurring costs, including revenue leakages, underinvestment in public goods, elite capture, macroeconomic volatility, and, in some cases, conflict.
What is different today is the pace. Demand for critical minerals is rising quickly, and governments are under pressure to act fast. In this environment, safeguards can slip, negotiation timelines shorten and transparency can weaken.
Examples from across the continent highlight this dynamic.
In Zimbabwe, the government suspended exports of all raw minerals and lithium concentrates in early 2026, citing concerns about malpractice and revenue leakages. The country is a major producer of lithium, and exports exceeded one million tonnes of spodumene concentrate in 2025. The decision reflects a push to capture more value within the country and encourage local processing while authorities work to strengthen oversight.
In Kenya, global attention has focused on Mrima Hill in Kwale County, where rare earth elements and niobium have been confirmed in meaningful quantities. The site has drawn interest from major investors and foreign governments, highlighting both commercial opportunity and the need for strong governance and transparent community engagement as the sector develops.
In the Democratic Republic of Congo, which provides the majority of the world’s cobalt, international engagement now includes not only commercial investment but also diplomatic and security dimensions. Deals and partnerships with a range of global partners illustrate how strategic minerals have become entangled with broader geopolitical interests, bringing both opportunity and complexity for local authorities and communities.
Across these cases, the challenge is not just access to resources or investor interest. It is the gap between geological potential and the ability of governments to capture revenue, manage it well, and use it in ways that support long-term national development.
Securing resources is one step. Converting them into lasting value is another.
Why PFM Remains the Missing Link
Public financial management is often seen as technical or administrative, but in practice it determines whether resource wealth benefits the wider population. In many resource-rich countries, governments collect only a fraction of what their extractive industries generate. Weak fiscal regimes, fragmented oversight, and limited audit capacity leave gaps that widen as investment in critical minerals grows, meaning large-scale extraction does not automatically translate into meaningful public revenue.
Even when revenues are captured, how they are managed matters just as much. Resource income does not always flow through the national budget; it can sit in state-owned enterprises, special funds, or off-budget arrangements with minimal scrutiny. This disconnect weakens the link between resource wealth and national development, reducing the impact on essential sectors such as infrastructure, education and social services.
Commodity markets are inherently cyclical, and resource-dependent budgets are vulnerable to sudden swings. Recent shifts in gold and other critical mineral markets show how quickly conditions can change. High revenues during price peaks can lead to unsustainable spending, while subsequent declines force abrupt and painful adjustments. Medium-term planning, stabilisation mechanisms, and credible saving strategies are essential to smooth these fluctuations and maintain fiscal stability.
Equally important is public trust. Communities living near extraction sites expect to see tangible benefits. When revenues are opaque or poorly spent, frustration grows, sometimes leading to social unrest. Transparent, accountable financial systems ensure that mineral wealth translates into visible improvements, building confidence in government institutions.
Beyond Extraction: Financing Transformation
Critical minerals offer more than royalties and taxes. African countries aim to use them for local processing, industrialisation and broader economic transformation. This requires careful planning: weak systems see revenues spent quickly, while strong PFM allows funds to build infrastructure, expand energy access and support industries creating lasting jobs.
Recent calls by African leaders for greater collective action on critical minerals reflect an awareness that fragmented approaches weaken bargaining power and can encourage a “race to the bottom.” Regional coordination can help strengthen negotiating positions, but its success depends on national institutions that enforce fiscal terms, manage shared projects and channel revenues effectively. Domestic public financial management remains the decisive factor in determining whether Africa’s mineral wealth fuels sustainable development or simply repeats familiar patterns.
Conclusion
Critical minerals offer African economies an opportunity few sectors can match, but results are far from automatic. Much depends on early choices in licensing, contracting and fiscal design, and even more on the ability of governments to manage what follows. Strong public financial management ensures revenues are tracked, allocated, and used effectively, while institutional memory preserves lessons from past experiences, helping avoid repeated mistakes.
Without disciplined systems, familiar patterns of lost value are likely to continue. With careful planning and learning from experience, mineral wealth can support stable public finances, improved services and wider economic transformation. In the end, the true test of resource wealth is not what lies underground, but how well it is managed above it.
Written by Carey Kluttz – Partnerships Director, Expertise Global
