Resource paradox : Sahel States

By Mary Alorh

The confederation of Sahel States faces significant challenges in development, as evidenced by troubling statistics. In 2021, Burkina Faso had a poverty rate of 88.10 percent, while Niger’s literacy rate was just 38.10 percent in 2022.

Mali scored 0.428 on the UNDP Human Development Index in 2021. These figures highlight a persistent lack of infrastructure development despite the region’s rich natural resources. The Sahel countries are endowed with vital minerals that are in high demand globally:

• Mali has emerged as one of Africa’s leading gold producers, particularly through the Loulo-Gounkoto complex.
• Niger ranks as the world’s fourth-largest producer of uranium and is among the top exporters to Europe.
• Burkina Faso boasts substantial mineral resources, including gold, zinc, copper, manganese, phosphate, and limestone.

The stark contrast between the wealth of resources and the poverty, unemployment, and illiteracy faced by the citizens of these nations has prompted leaders to reconsider how these resources can be leveraged for the benefit of their populations. In response, leaders are taking decisive actions that have instilled fear and uncertainty among companies operating in these countries.

Speculation regarding the potential loss of licenses for foreign mining companies to Russian and Chinese firms has contributed to this anxiety. However, this has not materialized, particularly in Mali, where the government aims to increase the share of resource revenues for its citizens.

Mali is strengthening its agencies to enforce and lead negotiations aimed at raising the Malian stake in resources from 20 percent to 35 percent.

Consequently, the government is employing various strategies, including unconventional methods, to capture the attention of stakeholders. A recent incident involved Barrick Gold, a Canadian company and the world’s second-largest gold mining firm.

The Malian government is pursuing 300 billion CFA (US$512 million) in outstanding taxes and dividends from Barrick Gold and is also demanding that Malian nationals be included in top management positions, with tax breaks becoming a thing of the past.

Mali is not alone in its quest for a larger share of mineral resource revenues. In June 2024, Niger revoked the license of French company Orano, which has operated uranium mines in Niger since the 1970s.

Niger is a significant uranium exporter to European nuclear plants, and the government has been reviewing all mining concessions since last year. Burkina Faso government’s plans to revoke certain licenses held by foreign firms in the mining sector have caused shares of Canadian companies like Fortuna Gold and Orezone GoldCorp to drop by 9 percent on the Toronto Stock Exchange.

As the gap between resource wealth and the quality of life for citizens continues to widen, ongoing revisions of mining laws and concessions are expected. This situation has already sparked discussions across the continent.

Mary Alorh is Director of Administration at DefSEC Analytics Africa Ltd., and is an expert in Gender, Youth, and Peace & Security initiatives in West Africa.