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Saturday 18 January 2020
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Mining In Africa Still Key To Economic Growth?

Mining In Africa Still Key To Economic Growth?

 

A number of countries on the African continent are developing, yet, not at the expected rate.

The smaller number that has had notable growth is not on auto-pilot and destined to for growth, but rather due to being blessed with some deposit of natural resources; which can be translated into wealth.

On that note, I will call natural resources the ‘fuel’ that works the engine of the ‘machine’ – country, to its destination. Natural resources translate into gross domestic product, G.D.P. They are a major source of wealth creation, employment, and empowerment for all. With the recent trends in the market and economy, a lot is left said than done, as the huge deposit of natural resources seem to be somewhat evolving from a blessing to a curse for the populace of Africa – or so as people allegedly put it. South Africa’s rich natural resource endowment is the heart of the prosperity of the country, and the core of conflicts in some of its challenges.

The beautiful continent of Africa is the world’s second largest and second most populous continent after Asia. It is over 30.3 million km (11.7 million square miles) including adjacent islands in land mass. It covers 6 per cent of the total earth’s surface and 20.4 per cent of its total land area.
The continent has an economy that has vast amount in forest land – the best for hunting, forest reserve, timber production, and agricultural land with the ideal climate for the production of wheat, maize, cocoa, palm, groundnut oil, and cassava amongst others. This was the first value of note until massive gold fields, diamond, oil (gas), coal, iron ore and platinum deposits spread across the countries were uncovered. This, potentially meant a possible boom of the economy of Africa into one of the fastest rising economies in the world.

With the large deposit of these natural resources in Africa, mining companies have been the biggest ‘visitors’ therein, and with governments all across Africa, together with the companies, are at sharp ends carrying the ‘tags’ of investor, involved in labour, mining community and media scrutiny. Africa, which produces more than sixty metal and mineral products, has a huge potential with respect to mineral reserves exploration and production. This is ‘crystal-clear’ and South Africa’s total reserves being among the world’s most valuable. The minerals production has an estimated worth of R20.3-trillion ($2.5-trillion). Generally, South Africa is estimated to have the world’s fifth-largest mining sector in terms of GDP value. It is however key to note that, according to the U.S. Geological Survey, South Africa has the world’s largest reserves of manganese and platinum group metals (PGMs), and among the largest reserves of gold, diamonds, chromite ore and vanadium. The country is blessed with resources that can last the mining to generations unborn.

Looking at South Africa’s economy and its fast pace of growth, it is all contributed to gold and diamond mining, the sector is an important foreign exchange earner, with gold accounting for more than one-third of its exports, the country’s diamond industry in 2009 being the fourth largest in the world – a big plus for South Africa and largely; Africa. In 2008, Africa produced about 483 tons of gold, 22 per cent of the world’s total production with Ghana, Guinea, Mali, and Tanzania among the major producers. Majorly, there is also coal deposits in the northern region of Africa, in Nigeria, southern Africa, and in Zaire.

The African continent is not devoid of petroleum. The petroleum reserves in North Africa is awash, countries like Libya, Algeria, Egypt, and Tunisia see abundancy in this resource. However, Nigeria is the biggest petroleum producer in West Africa; with Cameroon, Gabon, and Congo are not left from the list. In southern Africa, there is oil in Angola.

Preceding facts places Africa highly as a continent blessed in riches in a lot of sectors. Another form of natural resources found herein is good climate that is great for agriculture and tourism.

Agriculture in Africa creates wealth for over two-third of the continent’s working population in terms of either jobs or income, and contributes 20 to 60 per cent of every country’s gross domestic product (GDP) in the continent. In line with agriculture, Africa is blessed with beautiful forests and mighty oceans rich in trees and other vegetation and marine population respectively. Before the discovery of mineral resources, agriculture had always been a very important activity. The total value added of its fisheries and aquaculture sector alone is estimated at USD 24 billion.

The export of forest products, especially high-grade woods like mahogany and okoume, contributes largely, a significant part of Africa’s revenue. These woods are mostly exported from countries like Congo, Cameroon, the Central African Republic of Benin, Gabon, and Equatorial Guinea — where there is a dense rain forest. A large amount can be found in Gabon with over 90 per cent. The main market players of these wood-products are generally Japan, Israel, and the European Union.

With the fact that the main key players and investors of the natural resources in the motherland, Africa; being nationals from outside the shores, there has been some notions stating that the way the drilling away of the resources and constant interests in the African continent only means that the colonisers are still interested in Africa. As a result, different policies have been put together to leverage the powers of these companies, partnerships, in creating a comparative advantage that will lead to regional development solutions for African countries.

Mwangi S. Kimenyi and Zenia Lewis in their article for ‘Managing natural resources for development in East Africa’, spoke on different policies that should be used. They are – ADVANCING POLICIES FOR LAND ISSUES. It states that, land rights and their interplay with resource rights all constitute a major issue for oil and natural gas exploration in East Africa. Furthermore, land rights policies, they said are not enough to guarantee that citizens in this region are getting a fair deal. Governments should ensure that their land rights are structured in a way that does not allow the citizens to become second fiddle in their community, also not to allow the elites to manipulate customary laws land tenure rights at the expense of rural farmers and agricultural workers. Another is POLICIES FOR RESOURCE REVENUE COLLECTION – the addressing of the issues pertaining to better resource revenue collection is optimum but is nevertheless complicated, it should involve implementing the use of coordinating agencies and institutions, tax administrators, customs agencies, and the regulatory agencies to better checkmate the revenue influx and reduce corruption to the minimum.

What will drive the growth of the African economy?

Already in motion are the aforesaid policies, if put into effect, will cause a big boom and the economy of Africa will no more be in a falling curve. The introduction of opportunities of industrialisation within Africa for local industries in the different sectors to allow the indigenous companies to be on par with their foreign counterparts, thereby also making the ‘marketisation’ and value of our products to be of high value.

Another way to drive the growth of the economy is the employing of functional expertise. This is seen in the calling together of people that have years of experience in growth consulting and market research that can work on current trends in the market to make the business of mining these resources a reasonable one. Irrespective of the fact that strong growth is projected for Africa’s mining sector, minerals drilling and the likes, major challenges still exist- skills shortages (no manpower). There should be the training of more people to man the machines and industries, this will create job. There will be less a worry regarding locals playing second fiddle in their community. Less expatriates will be called and more development of the industries, and citizens.

Africa has a significant demand of her mineral resources and they are from Asia, India, China and largely Europe. As a continent, Africa needs to employ an equal exploration of other minerals apart from gold and diamond. There has been under-exploration of these minerals because the already mentioned resources are supposedly most sought after, and yet there are markets for other minerals. There is a need for diversification into agriculture to reduce dependency on a certain natural resource thereby totally reducing the reserve.

Another challenge, if tackled can trickle the growth of the economy exponentially is the cutting down of local rebellion in the locations of industries. The ‘Niger Delta Militants’ and ‘conflict diamonds’ or blood diamonds, civil wars. These can be seen in the countries with precious stones such as diamonds and oil. This affects both local and international companies. If through dialogues or amity talks, there can be created, a safe working environment for everyone, thereby increasing the tapping of these resources for the development of the continent.

In the absence of strong laws and clear policies governing resettlement, rural communities have been forcibly displaced from their farmlands and livelihood to make way for mining operations, and without adequate compensation to these families. The protection of vulnerable communities is an issue of concern. The struggle of oil between Nigeria and Cameroon for Bakassi, different families have been displaced with rebels taking their homes too. There should be provision of more jobs, better infrastructure, health and education services.

The mineral resources on the African continent easy drive you to ask weather this is a curse or a blessing? It should certainly be regarded as a blessing. The creation of strong policies to help growth, protection of lives and rights and great market research, understanding trends of the market will be of help to all. But then again, mineral resources, a blessing or a curse?



Obani Obodo is a creative writer, a copywriter, proofreader, freelancer, digital marketer, and an editor at Bookcraft Africa. His years of experience and expertise, as well as his cutting-edge approach to storytelling has distinguished him as a young promising writer in the Nigerian literary milieu. As a contributor to Neptune Prime newspaper, he continuously taps from the recesses of his creative ingenuity; telling stories in ways that leave them scintillating and ever green in the minds of his readers.