Opinion
Africa must benefit from its mineral and natural resources
The African Mining Vision, jointly developed by the African Union, the African Development Bank, the Economic Commission for Africa, and other UN agencies was adopted by the African Union Heads of States in 2009. The Vision advocates for “transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development”. At the core of the African Mining Vision is the realization that Africa’s mineral resources can be better utilized to address the continents social and economic needs; the focus on environmental and social sustainability, the advantages of regional and international integration with attendance hard and soft infrastructure challenges, the emphasis of building of backward, forward and side-ward linkages from the core mining sector and equitable principles of fairness in benefit sharing and use of resource revenues.
To achieve the high aspirations of this vision, Africa needs to get back to the fundamentals and rectify some of the initial problems that have continued to plague the management of the continent’s natural resources. At the fore of this endeavor is the capacity of governments to get the best deals for their countries during contract negotiations.
Capacity deficits have also been identified in critical areas of auditing, monitoring, regulation and improving resource exploitation regimes. In the Democratic Republic of Congo, a government committee reviewed 61 mining deals over a decade up to 2006 and found none acceptable. It recommended renegotiating 39 and canceling 22. Zambia, in the wake of increased international Copper prices and after years of subsidizing large multi-national companies working in its copper belt, successfully raised taxes for mining companies from 25 percent to 30 percent and introduced a windfall tax for exceptional profits. This earned it an extra US$415 million in supplementary revenues.
Other African countries have initiated similar cancellation or review of resource contract such as Guinea, Zambia, Tanzania, Liberia and Nigeria in order to increase their resource revenue base. This trend will continue to grow as civil society organizations and states increasingly realize the loss of revenue from their resources.
International processes such as the Kimberly Process for diamonds and the Extractive Industries Transparency Initiatives (EITI) for other minerals, though with their won weaknesses, have contributed to improving transparency and accountability in contract negotiation processes from the production side whilst the Dodd-Frank Wall Street Reform and Consumer Protection Act and other similar acts have also created avenues for fair play within the international circles.
On the other hand, the reducing policy space available for Africa within international trade negotiation processes must also be checked. Unfair trade treaties and rules set out by international bodies that penalize Africa’s value addition process to its primary commodities need to be reviewed in light of the increased demand and competition for Africa’s minerals from the rising south especially China and the Far East.
Secondly, in geological terms, Africa is still the ‘unknown continent’ with vastly unexplored quantities of extractive potential. Geological mapping and mineral inventory has not covered the entire continent thus masking the true geological potential of the continent. African governments do not have the capacity to take stock of their mineral resources relying on trans-national companies to access commercial capacities of newly found discoveries especially oil and gas. This lack of verified data severely compromises negotiation capacity and the continents bargaining power. New technologies abound that will make it easy for Africa to have a better appreciation of its natural resource base but this is held back by a lack of sustained and well-financial commitments with exploration largely left in the hands of the private sector.
