2. GIDEON NWANKWO - 2ND PLACE WINNER
HARNESSING AFRICA’S MINERAL RESOURCES FOR SUSTAINABLE GROWTH AND DEVELOPMENT
1.0 Introduction
Once upon a time, the richest human being in all history lived in Africa. He went by the name Mansa Musa and he ruled over the Malian Empire in the 13th century. Mansa’s wealth came from mining salt and gold deposits in the Malian kingdom. He developed ancient cities like Timbuktu and transformed the Malian empire into a sophisticated centre of attraction. But where is that Mali today? She is standing pathetically among the least developed nations in the dark corner of global ignominy extending her arms desperately for aids from foreigners. Just like Mali, several African countries are endowed with substantial amount of mineral resources that have not translated to improved standard of living for the larger population – a situation which conventional literatures termed “resource curse.” This essay examines the causes of this unfortunate situation and proffers strategic solutions that will promote the exploitation of mineral resources for Africa’s development and transformation.
2.0 Reasons for the poor exploitation of mineral resources for Africa’s development
Africa is home to some of the world’s largest deposits of minerals. However, poverty, inequality and unemployment remains high in the continent. Some of the reasons for this unfortunate situations are highlighted below;
2.1. Absence of local processing capacity
Africa exports most of its raw materials for processing into finished products in other parts of the world due to lack of processing capacity. For example, Africa holds 26% of the world bauxite reserves and produces 9% of world bauxite, in 2011 it only produced 4% of primary aluminium (International aluminium institute, 2011). It is more economical to process precious metals such as copper/cobalt locally because of high transport cost and the high value of the finished metals. The lack of local processing therefore potentially foregoes opportunities for job creation, revenue generation, development of skills and human capital.
2.2. Mineral resource industries are highly capital-intensive
Mining and oil and gas production are capital-intensive ventures that have very little forward or backward linkages to other aspects of the economy and have often been grown as virtual enclaves without tangible positive impact on the economic realities of host countries other than payment of taxes and royalties. These industries neither create jobs nor contribute significantly to development of skills and human capital.
2.3. State ownership issues
The World Bank (1981) has long argued that state ownership of productive enterprises is inefficient and wasteful. Similarly, Tangri (1999) argued that state-owned enterprises underperformed economically for several reasons including; inappropriate pricing policies, poor investment decisions, substantial overstaffing, and chronic management problems. Also, state ownership promotes corruption, enriches politicians and perpetuates poor management of mineral resources (Mbaku 1999).
2.4. Gender inequality in the extractive industry
At the 4th World Conference on Women in Beijing in 1995, the United Nations said that; “poverty has a woman’s face and that 70% of the world’s poor are women” (Claudine and Learnado, 2012). Sadly, women account for up to 30 per cent of the global artisanal and small-scale mining workforce (Hinton et al. 2003) and up to 50 per cent in Africa (UNECA, 2002) in some cases (such as Guinea) the proportion reaches as high as 75 per cent (Hentschel et al. 2002). These gender disparities have been accentuated by the absence of strong political and economic institutions that could integrate gender dimensions into the mineral resource sector.
3.0 Strategies for harnessing mineral resources for Africa’s development
The African mining vision says that “harnessing natural resources endowment in Africa is the key to Africa’s development.” The following steps are necessary in the exploitation of mineral resources for Africa’s development.
3.1. Promotion of local contents
Promoting local content will stimulate broad-based economic development by encouraging economic gains from the extractive industries to trickle down to local businesses and communities. In terms of employment, it will foster local recruitment, training and career progression of the domestic workforce, gender mainstreaming, the development of local infrastructure and support the small and medium-sized service enterprises through purchase of local goods and services.
3.2. Elimination of gender inequality in the mineral sectors
To promote gender equality in Africa’s extractive industries, there should be no discrimination between men and women in terms of workplace practices such as career advancement, remuneration, and a sense of belonging. Women should be allowed to occupy positions that enable them to be part of the decision-making body in the sector. This can encourage more women to join the sector and demystify the age-long narratives that society has about women working in a male-dominated work environment.
3.3 Adoption of minority ownership of mineral resource sectors
Studies have shown that state-owned sectors or enterprises are less efficient economically than privately owned ones. Unlike many other mineral exporting African countries, Botswana has less than a majority share of its mineral resource sector. However, it is also unique in that it has exactly 50% ownership. By law, Botswana can demand between 15 and 25 percent of stock from mining companies, and it can purchase up to 50% (Cobbe, 1979). In fact, the parastatal De Beers Botswana Mining Company (DEBSWANA) is jointly owned by the state of Botswana and De Beers Mining Company, which is the sole diamond mining interest in the country. The state also has minority ownership of the next-largest extractive industry of copper-nickel, owning 15% of Botswana Roan Selection Trust. Other African countries need to learn from Botswana’s success.
Conclusion
The mineral resource sector wields great potentials for sustainable development in Africa. By following the recommendations made in this essay, we can achieve the African Union vision of “building an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in international arena.” The right time to change mind-set is now because African problems have African solutions. The clock is ticking!
REFERENCES
Hentschel, T., Hruschka, F., & Priester, M. (2002). Global report on artisanal and small-scale mining. The report commissioned by the Mining, Minerals and Sustainable Development, International Institute for Environment and Development. Retrieved from
http://www.ddiglobal.org/login/resources/g00723.pdf
Hinton, J., Veiga, M. M., & Beinhoff, C. (2003). Women and artisanal mining: Gender roles and the road ahead. In: Hilson, G. (Ed.), The socio-economic impacts of artisanal and small-scale mining in developing countries (pp. 161–203), London: Taylor & Francis.
Reserves and production of bauxite: USGS; primary aluminum production: International Aluminum Institute (http://www.world-aluminium.org/statistics/primary-aluminium production/#data)
Claudine S. and Learnado G. Extractive Industries: Optimizing Value Retention in Host Countries, UNCTAD, Geneva 2012.
Tangri, Roger. 1999. The Politics of Patronage in Africa: parastatals, privatization, and private enterprise. Trenton, NJ: Africa World Press.
United Nations Economic Commission for Africa, 2002.
World Bank. 1981. Accelerated Development in Sub-Saharan Africa: An Agenda for Action. Washington, D.C.: The World Bank.
