Can Natural Resources Pave the Road to Africa’s Industrialization?

Many African countries face a dilemma. After a decade of consistent economic growth, often propelled by high commodity prices, half the continent’s population still lives in poverty. Even if rising demand for raw materials from the booming cities of China and India, among others, has driven growth in Africa’s mining sector, most of the continent has not yet translated mineral wealth into industrialization and widespread economic development. Most African countries continue to export raw materials and then pay a premium to import the products made with them.

Regional initiatives, such as the African Mining Vision, adopted in 2009 by the African Union (AU) Heads of State and Government, aim to transform Africa’s natural wealth into increased prosperity for the citizens of the continent. Last year, the African Minerals Development Centre (AMDC) was launched to turn the vision and its action plan into a reality. At the national level, African Mining ministers believe the sector can serve as vehicle for the long-sought African industrialization. They are calling for African countries to move downstream, to process their mineral wealth in the same place where it is extracted.
 
Africa needs to “shift from exporting of largely raw material to ensuring that minerals serve as a catalyst for accelerated industrialization through mineral value-addition,” said Susan Shabangu, South Africa’s Minister of Mines.  She made the comment during  the Ministerial Symposium held at the recent Mining Indaba—Africa’s biggest mining conference—in Cape Town, South Africa in early February 2014.  The symposium, supported by the World Bank Group, was attended by African mining ministers and top private sector representatives, all of whom emphasized the need for effective partnerships to harness the development potential in mining.
 
Her Excellency Dr. Nkosazana Dlamini Zuma, Chairperson of the African Union Commission, the executive body of the African Union, called on all of us at Mining Indaba to work together, to seek “partnerships of mutual respect” to address the urgent needs of the African people and build the infrastructure the continent desperately needs.
 
African governments are seeking a balance that combines creating an attractive investment climate with ensuring that their countries maximize the benefits from mineral extraction. But industrialization and economic diversification are still a challenge for many. To meet it, governments need to set up appropriate frameworks and work with industry, to create the conditions in which mining companies can create local jobs and find local people with the needed skills to fill them.
 
For industrialization to happen, African governments also need to provide electric power. This is Africa’s biggest infrastructure bottleneck, and it stands in the way of progress in the mining sector and—more broadly—the needed progress in reducing poverty. Finally, African decision-makers and negotiators need to have as comprehensive knowledge as possible of the real value of their sub-surface mineral, oil and gas resources and ensure that they have the right people for the skilled jobs that their extraction requires. No single actor—neither government, nor companies, nor donors, nor civil society organizations—can get there alone.
 
The World Bank Group is positioned to assist in bringing the parties together through use of its financing as well as its knowledge services, which draw, in large part on the experience and expertise of its member countries. This combination can help countries learn from the practical implementation of global best practices and figure out what will work in their specific context.
 
Four things the Bank Group is doing can help:
 
1. Through the Billion Dollar Map project, we are raising $1 billion to map out the favorable geological conditions of Africa’s sub-surface resources and help governments systematize and make public the information;  
 
2. A study called The Power of the Mine, to be launched later this year, projects the energy demands of the mining sector in Africa over the next 20 years;
 
3. Support for African institutions in training the next generation of leaders through the African Centers of Excellence. The program, in partnership with the Association of African Universities, will strengthen higher education in agriculture, engineering, health, mining, science and technology across West Africa;
 
4.  Convening the first global partnership for local content in the extractive industries to facilitate knowledge-sharing, creation and dissemination on this issue.
 
It’s a start that makes me optimistic about the role that mining can play in laying the foundation of Africa’s industrialization.