Business
Getting Rich the Hard Way
Royal Brain Wave
Perhaps the world’s first example of national industrial policy was set in motion by King Henry VII of England in 1485, when he realized that England should be a textile-exporting country rather than exporting raw materials. He placed tariffs on wool exports and gave tax breaks and monopolies to selected newly established wool manufacturers. The UK and US have enjoyed a fairly good run.
But enough of economists and historians: a small band of industrialists and politicians across Africa are ditching the ideological straight jackets inherited from the World Bank and the International Monetary Fund’s ‘Washington Consensus’ and are adopting the policies and business strategies that have made Japan, South Korea, Taiwan and China rich, and the West before them too.
Daphne Mashile-Nkosi is one of them. Imprisoned by the apartheid regime, she became a political and women’s rights activist, and is perhaps an unlikely candidate for African industrial heavyweight. Her partners in the Kalagadi Manganese mining project in South Africa, ArcelorMittal, had their reservations. “They thought, here is a black woman, with no experience, saying she is going to build a sinter plant”, Mashile-Nkosi told The Africa Report.
“Of course, you want to protect your investment, but mostly you don’t believe in her.” Nevertheless, in November 2013, Kalagadi’s plant was officially opened. “Here is a heroine”, said South Africa’s President Jacob Zuma at the launch. Rather than exporting raw manganese ore, the manganese sinter project refines it to around 48% purity. The R7 billion ($633 million) project in the Northern Cape will eventually be accompanied by a smelter at the Coega Industrial Development Zone.
It will produce 320,000 ton of high-carbon ferro-manganese alloy annually, a key input for the steel industry. Proving the economics of the project have good fundamentals, Kalagadi has secured an off-take agreement with the Johannesburg Stock Exchange-listed Metmar.
The logic of beneficiation, or adding value to locally produced raw materials, is clear for Mashile-Nkosi: “It brings more jobs and more skills. The further down the road to beneficiation, the more you need your metallurgists, your highly skilled artisans. And you can use these opportunities to train and employ people.”
From trade to industry
Africa’s richest and most successful businessman appears to agree. Aliko Dangote, who for many years contented himself with importing refined sugar and cement into Nigeria, has caught the beneficiation bug. Dangote’s cement factories now dot the landscape, and his Dansa Foods is building a $36 million food-processing plant in Kano, northern Nigeria. It will turn part of Nigeria’s tomato crop into tomato paste. The country currently imports more than 300,000 tons of tomato paste annually, costing $360 million.
