The fight for resources begins

 

SADC has decided to leverage benefits from its vast natural resources against conflicting global interests.

This is one region that is rich in minerals, water resources and fertile arable land, yet the majority of its people live in poverty.

“From the Congo to the Cape we have all the resources any group of 250 million people need to live in prosperity just like the rich OECD countries and yet by and large we live in poverty,” observed a Botswana-based researcher, Professor Roman Grynberg.

But at the just-ended 34th Ordinary Summit of Heads of State and Government, there was resounding consensus that the region needs to industrialise to end poverty.

Zimbabwe’s President Robert Mugabe, who assumed the Chairmanship of the regional body, echoed SADC member states’ collective decision to industrialise.

To do this, African countries need to beneficiate their natural resources by focusing on science and technology, research and innovation, as well as technical skills development. This was the counsel of African Union Commission Chairperson Dr Nkosazana Dlamini-Zuma to the 15-member regional bloc at the just-ended Summit.

“For us to achieve the prosperous, integrated, people-centred Africa, at peace with itself and a dynamic force in the world, indeed we need to transform our economies and leverage the continent’s diverse resources through value addition and beneficiation,” she said.

In a communique issued at the end of the summit, SADC resolved that industrialisation should take centre stage in its regional integration agenda.

To this effect, the summit mandated the Ministerial Task Force on Regional Economic Integration to develop a strategy and road map for industrialisation in the region.

In fact, the SADC Regional Indicative Strategic Development Plan (2015-2020) will encompass strategies for natural resource beneficiation and value addition, according to Zimbabwe’s Minister of Foreign Affairs, Simbarashe Mumbengegwi.

Mumbengegwi, who is the chairperson of the SADC Council of Ministers, said this approach was a sure way to promote development and end poverty.

The natural resource beneficiation drive entails that mine owners need to build refineries in countries of origin so that they could add value to minerals before they are exported.

This, if well implemented, would guarantee the kind of economic growth that could trickle down to the poor.

This is also expected to come with commensurate job creation and socio-economic development in the natural resource- endowed countries.

Despite SADC’s well-intended intentions to beneficiate its natural resources, global agendas and member states’ sovereign interests will certainly make the delivery of the plan difficult.

For instance, mine owners are not keen on building refineries in Africa and only do so when they are forced as in the case of Zambia where President Michael Sata has banned the export of copper concentrates.

SADC is well endowed in natural resources, and talking of mineral wealth, the mining industry is a major income earner and employer. Statistics from the SADC Secretariat indicate that about half of the world’s vanadium, platinum, and diamonds originate in the region, along with 36 percent of gold and 20 percent of cobalt.

Despite its endowment, the region does not benefit much from its natural resources because Africa remains less competitive in the value-addition business.

Poverty is high in Southern Africa and generally countries rank low on the United Nations Development Programme human development index.

“Challenges such as the lack of infrastructure, cost of energy, power supply and fiscal incentives have contributed to there being no new downstream processing capability in Africa,” a University of Zambia economist, Felix Masiye, said.

Mine owners who export unprocessed minerals are said to benefit more from cheaper transportation costs and profits from the sale of finished products.

Inasmuch as SADC countries plan to come up with natural resource beneficiation policies, they should prepare for a tug of war with investors who have a geo-hegemonic position on the base metal business.

The export of processed copper ore, for instance, is definitely not in the best interest of foreign mining investors.

“There is some evidence that unprocessed copper ore contains precious metals such as gold for which no tax is paid by investors. In such circumstances, mining investors are unlikely to easily go into processing copper ore,” Dr Masiye said.

Prof Roman said the beneficiation of natural resources entails adding local value to basic raw materials as a matter of economic policy.

However, the question is, will SADC countries get voluntary consent of mine owners who are apparently comfortable and benefiting more from the raw material business?

Prof Roman argues that this is the most logical thing to do given the economic situation in natural resource- endowed countries.

“Namibia has zinc, Zambia has copper, Mozambique has aluminium and Botswana has nickel, and yet we think as countries and not as SADC.

“If we start beneficiating our base metals and providing cheap and abundant electricity, then so much can be done and the possibilities are limitless. The key is good transport and power,” he said.

Prof Roman argues that at the moment, the key to beneficiation is to find ways to co-operate with China which dominates virtually every base metal value chain.

“They have made beneficiation very difficult in Africa because their industrial policy has created massive excess capacity in, and pushed smelting and refining margins so far down in the base metal sector that no one wants to build smelters in Africa and only do so where they are forced. Zambia is working closely with China and may well benefit from it.”

He says it may be possible to beneficiate Africa’s base metals without China, but it will be much harder.

However, Prof Roman contends that beneficiation will not in itself solve SADC’s employment problems. “It is not a panacea. It is capital-intensive and in and of itself creates few jobs.”

An independent researcher in natural resources, Francis Ng’ambi of Malawi, blames the natural resource misfortune of Africa on liberalisation policies espoused by the IMF and World Bank.

He argues that these policies have allowed multi-national corporations (MNC) to exploit natural resources in a manner that disadvantages endowed countries.

He said it was sad that Southern Africa is endowed with lots of natural resources, both renewable and non-renewable, but the majority of its people live in poverty. Mr Ng’ambi said the export of minerals in their unprocessed form is a colonial and post-independence problem which needs to be resolved.

He said founding fathers of the continent tried to industrialise for at least three decades, but Africa reverted to being a source of natural resources when it embraced neo-liberalism policies.

“This is done under the guise that Africa has no capacity to add value to its minerals. It’s not true, investors can’t tell us what to do because we own the minerals,” Mr Ng’ambi said.

The lack of smelters in the natural resource-rich region means that mineral wealth benefits accrue elsewhere where value-addition is done.

“The problem of Africa being a source of raw materials has also brought about issues of tax evasion, capital flight, and environmental degradation,” Mr Ng’ambi said. – Zambia Daily Mail  

September 2014
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