Natural resources can propel growth

Windhoek – From Cape to Cairo or Yaoundé to Mogadishu, the scramble for Africa's resources has often caused problems instead of creating prosperity.
Most of the profits from resource exploitation leave the continent entirely in the hands of foreign-owned companies which pay low rates of tax.
Very few African countries process their own raw materials, with the bulk of the value-addition taking place elsewhere and benefiting others.
SADC is fast becoming an attractive region for ambitious explorers, seeking to tap the vast unexplored reserves available in the region.
In the wake of 2011’s so-called Arab Spring and the subsequent disruption to Libyan oil supplies, the importance of Southern Africa as the new frontier for the international oil industry cannot be over-emphasised.
SADC's vast and largely untapped hydrocarbon resources are seen filling the gap and taking up a more prominent place among the world’s biggest oil producers.
Namibia is regarded as the next big player in Africa’s oil industry, expected to join continental petroleum powerhouses Angola and Nigeria by 2015.
With an estimated 11 billion barrels of oil reserves, Namibia is marginally behind northern neighbours Angola in that regard. Mines and Energy Minister Isak Katali says Namibia could become an oil producer by as early as 2015.
Recent discoveries by Italian oil and gas firm, ENI and Anadarko Petroleum of the United States have also sparked tremendous interest from international gas and oil companies to start exploring offshore Mozambique.
Angola is the second-largest oil producer in Africa and the eighth largest in the world.
In addition, SADC and other regions of Africa have other vast natural resources that include timber, fishery, land, water and minerals such as diamonds, gold and platinum.
The new discoveries of oil, gas and other natural resources in a number of southern African countries such as Malawi, Mozambique, Namibia and Tanzania, therefore, raise the important question of whether these windfalls will be a blessing that brings prosperity and hope, or will it be a political and economic curse?
Despite all the abundance of natural resources on the continent, southern Africa and the rest of Africa continue to be among the poorest in the world.
As such, there is need for the continent to come up with a viable strategy that ensures that the extraction of natural resources from the continent is beneficial to Africa.
“When we extract the minerals, we are extracting our capital. Therefore, we need to use them wisely,” Claude Kabemba, director of the Southern Africa Resources Watch (SARW) told SADC journalists attending a summer school in Windhoek, Namibia.
He said natural resources are a valuable asset for sustaining growth, reducing poverty and achieving the Millennium Development Goals, hence the continent must properly manage its resources.
He said another critical intervention for Africa to manage its resources is to come up with a database that profiles the various natural resources that are found on the continent. Presently, Africa has no proper documentation of its resources.
This situation has resulted in most African governments being shortchanged in mineral extraction negotiations as they are not aware of the exact quality and quantity of their natural resources.
“Africa needs to invest heavily in data collection and knowledge management about its natural resources,” Kabemba said, adding that most of the available data is from investors who usually manipulate the data for their own use.
He urged African governments to also consider re-negotiating some of the mineral extraction deals signed many decades ago as most of them are dubious and do not benefit the continent.
Such a route may pose its own technical and legal challenges, but is nevertheless an important intervention if Africa is to take full advantage of its resources, Kabemba said.
For example, the DRC has in the past few years re-negotiated some of its mining deals. It has renegotiated and published natural resource contracts in a move meant to improve transparency.
In this regard, other African countries could follow suit and review their natural extraction deals.
To fully benefit from its natural resources, Africa should also review its minerals laws and royalty regime and systems.
“It’s important that Africa sets good tax clauses in the contracts,” Kabemba said.
Africa must step up efforts to own and have a stake in the mining companies to ensure that the benefits remain in the host nation.
Some countries, including Botswana and Zimbabwe, have taken such steps to have the majority shares in these mining companies. –



November 2012
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