11. HOWARD MWESIGWA

”As Africa, we must add value to our minerals. We have to think about regional economic

zones for adding value...” - Dr. Frank Mugenyi (Chairperson MADI)

Yes, I agree. Indeed, policy makers need to address not only the governance and sustainability of the

African extractives sector, but also to stimulate value addition and promote linkages with other sectors

in the economy. However, before delving into this rather intricate and delicate discussion, it is

imperative to first paint a vivid picture of what the African extractives industry looks like at present,

and then demonstrate why the suggestions I make are not only timely, but also critical to Africa’s

extractives industry.

The African Natural Resources Center (ANRC) noted in 2016, that statistically, about 30% of all global

mineral reserves are found in Africa. That the continent’s proven oil reserves constitute 8% of the

world’s stock and those of natural gas amount to 7% and furthermore, that minerals account for an

average of 70% of total African exports and about 28% of gross domestic product. However many of

these minerals are exported in their raw cum crude form with little or no value added. Accordingly,

the revenue accruing from such crude exports are meagre in comparison with the potential revenue

that would accrue, if deliberate, intentional and strategic steps were to be taken to pursue value

addition for sustainable development and to harness the attendant linkages with other sectors of the

economy.

In this discussion, my objective is two-fold. The first facet seeks to challenge and resultantly incentivize

the mineral resource-governance architects in Africa, to make the critical decision whether to

perpetually remain crude-mineral producers at the mercy of fluctuating raw-mineral prices, or to

optimally leverage mineral value-chains as a propulsive engine for industrialization and structural

transformation of their economies. The second facet seeks to suggest practical and feasible solutions

through which value addition and multi-sectoral linkage propagation can be realized, in the African

extractives industry. In my considered opinion, this discussion is long overdue because it is starkly

undoubtable that the exportation of the continent’s resources in raw form has the regrettable and

detrimental ripple effect of exporting jobs and further denying African countries the substantial

benefits attendant to the myriad of activities and undertakings along the mineral value-chain. In that

regard, it ought to be emphatically noted as observed in the African Mining Vision, that mineral


resources offer wide-ranging opportunities for industrialization through the mining sector supply-

chain, the production of key mineral-based feed-stocks for other sectors which fundamentally


aggrandizes forward/downstream and backward/upstream linkages with those other sectors of the


economy and finally, the manufacturing of intermediate and finished value-added products for both

domestic and external consumption which has the residual effect of augmenting sustainable local and

regional economic development.

In light of the foregoing, what then, ought to be done? Firstly, African States need to deliberately

draw comprehensive strategic plans for short-run and long-run investment in mineral value

addition, at both the national and regional level. At the domestic arena, each African state ought

to undertake in-depth comparative value-chain analyses and comprehensive market analyses hinged

on the commodity-by-commodity model, so as to ascertain the requisite considerations in the

development of a viable sub-sector and what supplementary support needs to be availed therewith, to

optimally realize value-addition. In furtherance of this aspiration, African countries could explore the

possibility of prioritizing value addition in the extractives industry through their national development

plans and periodic vision targets and accordingly undertake periodic appraisals, so as to evaluate the

progress made in pursuance of this objective.

Secondly, African states ought to undertake strategic investment in geological research to

appreciate their true mineral resource endowment in a bid to optimally develop

comprehensive value addition strategies. In this regard, it is of paramount importance to note that

a comprehensive geological data bank of a country’s mineral resources pertaining to the location, size,

quality and cost of depletion of each mineral deposit is essential to the coordination and facilitation

of the undertakings of large-scale mining companies, and also the meaningful orientation of the

artisanal and small-scale mining players into the country’s mainstream value-chain. Through strategic

investment in comprehensive and accurate geological surveys, African states would find incentive for

political will to mobilise local capital for value addition in the extractives industry, which is a necessary

diametrical shift from the reliance on foreign direct investment (FDI), alive to the fact that FDI has


contributed significantly to the perpetuation of the African extractives industry as a primarily ‘raw-

material’ one, for the global north industries. Essentially, we must decolonize our extractives industry.


Thirdly, African states should coalesce and synchronize their synergies through leveraging

regional cooperation in the establishment of regional economic zones for concerted mineral

value-addition. It ought to be noted that investment in the extractives industry is both long-term and

capital intensive. Accordingly, to overcome the constraints to wit, monetary, technical or technological

shortfalls et cetera, that individual African countries face, African countries need to craft Regional

Mining Visions (RMVs) as a localized version of the African Mining Vision (AMV) and its


domestication through Country Mining Visions (CMVs) as regulatory frameworks for the

establishment of economic zones for mineral value-addition. Through these zones, African states are

able to enjoy economies of scale, in the initiation of comprehensive regional geological surveys, in the

mobilization of local capital for the establishment of large-scale regional refinery and value-addition

plants, and over and above, in the aggrandizement and emboldening of their negotiating power with

foreign investors in the extractives sector. Ultimately, these zones can be utilized to foster the


strengthening of oversight and accountability in the African extractives sector, through collective self-

reliance and best practice to wit, the establishment of regional mineral audit agencies that share and


appraise data and research for value-addition.

By and large, the realization of value addition and the attendant linkages in the African extractives

industry is bound to create more employment opportunities, foster industrialization and diversify

African economies hence birthing the much needed socio-economic transformation in Africa.

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