Africa: Mindset Change Key to Africa’s Prosperity

It is no secret that Africa is rich in minerals and other natural resources, resources that have been commercially exploited for centuries. Africa ranks first or second in the world’s global reserves in bauxite, cobalt, coltan, phosphate rock, platinum, vermiculite, manganese, soda ash and zirconium. The continent also has most other minerals and precious metals.

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The continent also accounts for three-quarters of the world’s platinum supply. Half of the world’s diamonds and chromium comes from the continent, which also accounts for one-fifth of global gold and uranium supplies. Africa is also home to at least 33 countries with oil and gas. With recent discoveries, its importance as producer of iron ore is growing.

Although expenditure on exploration has grown dramatically over the last decade, the continent remains amongst the least explored regions of the world. Despite these riches and potentials, the continent’s people are amongst the poorest in the world and the continent has some of the most glaring inequalities.

This paradox of rich Africa, poor Africans is best characterised by the systematic inconsistency between a continent with a young, growing and fast urbanising population, rich natural resources and productive land with the most diverse flora and fauna, and yet the countries that make up the continent are in the majority of the least developed economies in the world.

We have the collective responsibility to reverse this paradox. Lessons from some of the most developed medium and large economies in the world show that most of these economies grew through the utilisation of resources, even though most of those countries do not have the resources locally. But they used these resources. One can therefore draw another paradox that has favoured the most developed economies.

This paradox sees rich countries not having the resources but recording exceptional economic progress. This second paradox is largely driven by the exploitation of the developing world, including Africa. The paradox is also driven by the aid dependency discourse which often sees some of our ministers of finance discussing aid for breakfast, lunch and dinner, despite the fact that fuel and mineral exports from Africa are more than seven times the value of aid.

We know no country that has ever developed through aid. Our development ought to be informed by what is in our possession and comparative advantage — in our case our riches lie in our abundant resources which include (1) human resources, which sees the continent having the world’s youngest population, (2) renewable resources, which include water, forests, oceans, fauna, flora, diverse ecosystems and sunshine, and (3) non-renewables, which include our mineral, gas, coal and oil resources.

Africa’s abundant resources should be used to spur on our industrialisation, economic modernisation and diversification towards an integrated and peaceful Africa with shared prosperity. In order to meet this objective we must address the factors that have perpetuated the paradox of a rich Africa, poor Africans by consistently and constantly changing the mind- set.

In order to change mindsets and receive better benefits from our resources we must strengthen our knowledge on the resources available to us by (amongst others) strengthening our mapping systems so that we can explore our own resources in a more sustainable manner.

We must change the mindsets so that we may move away from the current corrupt and rent seeking tendencies. This would ensure that we negotiate contracts that put African interests first and create sustainable linkages with local economies. The mindset change must increase the value add to our natural resources from 15 percent to at least 30 percent or more so that we can create jobs for millions of Africans who are currently excluded from the economy. In the end this will ensure that we cease to be a net exporter of raw materials.

We will ensure that we stop exporting jobs due to not processing our raw materials thus securing for us better economic opportunities and revenue generation. Every time we export raw material — we export jobs The changing of mindsets will require strong institutions and management, which will strengthen our strategies and facilitate for cohesive policies and implementation.

In this regard, we have also mooted an African Minerals Development Centre that will provide a framework for countries to negotiate better terms and contracts.

This centre will also complement our Commodity Strategy. Through strengthened institutions we will also ensure that we improve the picture in relation to domestic savings, resource mobilisation, tax collection and the patterns of ownership in the sector.

These strong institutions will assist in reversing illicit financial flows. Ultimately all these actions will improve the position of the fiscal base of African countries whilst facilitating for a more equitable redistribution of wealth and securing a better quality life for all Africans.

It is for these reasons that we developed and are implementing our 50-year vision for the Africa we want, through Agenda 2063. As an overarching development framework, it seeks to focus on developing much needed skills so Africans can take charge of their own resources, and use them to industrialise our econ- omies.

This will require that we provide energy to mines, industries, homes, farms, cities, businesses and rural areas. Through Agenda 2063 we will also connect Africans through ICT and transport networks; and we will improve the beneficiation and value addition to our natural resources.

More specifically, Agenda 2063 urges us to accelerate the implementation of the African Mining Vision, which advocates for “transparent, equitable and optimal exploration of mineral resources to underpin broad-based sustainable growth and socio-economic development”.

As Dr Carlos Lopes, Executive Secretary of the UN Economic Commission for Africa, wrote in his blog: At the core of the African Mining Vision is the realisation that Africa’s mineral resources can be better utilised to address the continent’s social and economic needs; the focus on environmental and social sustainability, the advantages of regional and international integration with attendant hard and soft infrastructure challenges, the emphasis of building of backward, forward and sideward linkages from the core mining sector and equitable principles of fairness in benefit sharing and use of resource revenues.

The business that small-scale miners are in can and must therefore contribute towards the realisation of these aspirations, most specifically in the following areas:

(1) The development of a critical mass of relevant African skills in the sector, the geologists, geophysicists and engineers so essential to small-scale mining, but also towards all skills necessary not only for exploration, but production and value addition.

(2) Linking the development of mining to the development of infrastructure. The classical picture of mining in Africa is that of a small island of efficiency (with water electricity, transport linkages) whilst communities around them are in the dark (no schools, no transport).

In addition, the transport and other infrastructure it develop, are aimed at taking whatever its mines, out of the continent by the quickest possible route. We must move away from this model, and ensure that there are the backward and forward linkages to the local and regional economies.

(3) The mining sector counts amongst those responsible for the illicit financial flows from the continent. You are in the sector and can help us to stem this tide of capital needed for developing the continent;

(4) Last, but not least, the need to also focus on the link to beneficiation of all the resources we are currently exporting.

Within Agenda 2063, we are also paying particular attention to Africa’s blue economy. Within this, deep-sea exploration is of course one component.

Why now?

Today, We have a window of opportunity, where a number of economic, social and political factors have coincided and cohere in our favour. We cannot expect to do the very same things over and over again and expect different results. We cannot afford to continue on the same path, which has treated our resource heritage inappropriately and without a common purpose or vision. We must instil a mind-set change away from the misuse of our resources towards seeking benefits for all our people: the poor and marginalized majority.

We must use these resources to the benefit of our countries, these resources must not only benefit the companies where the countries come from as these resources are our common heritage they are ours we must have a win-win situation. We must use these resources towards a shared prosperity and inclusive development, as shown by the example of the “so called” Asian Tigers.

*Dr. Nkosazana Dlamini Zuma is the Chairperson of the AU Commission.- African Executive

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African Governments Urged to Shift Policy in the Energy Sector

African governments have been called upon to consider shifting policy in the energy sector by investing in industrialisation and providing subsidies on electricity for people in rural areas who are extremely poor.

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African Management Services Company (AMSCO) Chairperson Ali Mufuruki said governments should consider making a shift in policy for energy by providing subsidies for poor people to allow them to have access to energy.

Mufuruki proposed that government should consider powering their communities using renewable energy as it is an environmentally safe and easier to manage for people in remote areas as it is also readily available.

This was disclosed during a Wednesday panel discussion on the topic on green energy and innovation at the 2016 African Development Bank (AfDB) Annual Meetings at Mulungushi International Conference Centre in Lusaka, Zambia.

“A lot of money is being wasted in budgets on rural electrification, which uses extensive infrastructure just to light up one village when those villages can use renewable energy as an alternative,” he said.

Mufuruki said some of the constraints impeding the progress of providing power to communities in Africa is the control of power utility companies by politicians.

He said most African leaders have a tendency to use power utility firms for their political ambition.

Mufuruki called on governments look at investing in green energy as it can lead to greater productivity on the African continent.

He said the move will help many countries move forward at a faster rate.

Carbon Africa Project Manager Carsten Jung said some of the constraints hindering the progress of powering Africa include the lack of bankable projects.

For his part, Jung called for the increase in bankable projects if Africa is to achieve its goals in the energy sector.

He lamented that many projects lack funding, as most of the funds get used up in the initial stages.

“Many projects in Africa fail because the implementation process takes too long. Some projects take more than eight years to be implemented and these cause a strain on the resources,” he said.

Jung called for efficiency in the provision of projects and also the need for projects to take off quickly.

He further called on African countries to take centre stage in managing the affairs surrounding energy and to have a sense of ownership in energy-related matter and projects.

“Policy drives investment,” he said, matter-of-factly.

He also said that there were a lot of gaps in the energy sector, which include lack of technological advancement, lack of resources and lack of industrialisation for energy use.

Consolidated Infrastructure Group Chief Investment Officer Diron Moore said renewable energy has the potential to provide power to Africa because it is cheaper.

Moore advised that African countries should look at the option of renewable energy and to open up pathways for investors to consider exploring the avenue.

He said some African countries are endowed with natural resources, such as coal. Investing in renewable energy was good, he said, because it is reliable and has reliable cash flows.

The gaps that have been identified in the energy sector in Africa should be used as an opportunity for stakeholders to invest in the sector, Moore continued.

Meanwhile, Michael Gera, Managing Partner of Energy Access Venture, lamented the mindset of people in rural areas who do not see the need for electricity.

“Some of these people live right under the grid and they do not care about being connected,” he said.

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